Florida Statutes
That are Pertinent to Life Insurance & Finance
(all-in-one)

Chapter 624 Part I
Scope of Code

§624.01 FS | Short Title

Chapters 624-632, 634, 635, 636, 641, 642, 648, and 651 constitute the “Florida Insurance Code.”

§624.02 FS | Insurance Defined

“Insurance” is a contract whereby one undertakes to indemnify another or pay or allow a specified amount or a determinable benefit upon determinable contingencies.

§624.03 FS | Insurer Defined

“Insurer” includes every person engaged as indemnitor, surety, or contractor in the business of entering into contracts of insurance or of annuity.

§624.031 FS | Self-Insurance Defined

For the purposes of ss. 627.551 and 627.651, self-insurance includes any plan, fund, or program which is communicated or the benefits of which are described in writing to employees and which has heretofore been or is hereafter established by or on behalf of any individual, partnership, association, corporation, trustee, governmental unit, employer, or employee organization, or any other organized group, for the purpose of providing for employees or their beneficiaries through such individual, partnership, association, corporation, trustee, governmental unit, employer, or employee organization, or any other group, benefits in the event of sickness, accident, disability, or death. Self-insurance does not include:

(1) Any plan with respect to which benefits are insured or reinsured by an insurance company or are provided by a health maintenance organization.

(2) Any plan covering fewer than 10 employees in this state.

(3) Any plan established and maintained as a pension or profit-sharing plan for the exclusive benefit of employees and their beneficiaries.

(4) Any plan established and maintained for the purpose of complying with any workers’ compensation law.

(5) Any plan administered by or for the Federal Government.

(6) Any plan with respect to payments by an employer continuing an employee’s regular compensation, or part thereof, during an illness or disability.

(7) Any plan which is primarily for the purpose of providing first aid care and treatment, at a dispensary of an employer, for injury or sickness of employees while engaged in their employment.

(8) Any plan established and maintained for the purpose of providing malpractice coverage or professional liability coverage.

§624.04 FS | Person Defined

“Person” includes an individual, insurer, company, association, organization, Lloyds, society, reciprocal insurer or interinsurance exchange, partnership, syndicate, business trust, corporation, agent, general agent, broker, service representative, adjuster, and every legal entity.

§624.05 FS | Department, "Commission," and "Office" Defined

As used in the Insurance Code:

(1) “Department” means the Department of Financial Services. The term does not mean the Financial Services Commission or any office of the Financial Services Commission.

(2) “Commission” means the Financial Services Commission.

(3) “Office” means the Office of Insurance Regulation of the Financial Services Commission.

§624.06 FS | Domestic, "Foreign," "Alien" Insurer Defined

(1) A “domestic” insurer is one formed under the laws of this state.

(2) A “foreign” insurer is one formed under the laws of any state, district, territory, or commonwealth of the United States other than this state.

(3) An “alien” insurer is an insurer other than a domestic or foreign insurer.

§624.07 FS | Domicile Defined

Except as provided in s. 631.011, the “domicile” of an insurer means:

(1) As to Canadian insurers, Canada and the province under the laws of which the insurer was formed.

(2) As to other alien insurers authorized to transact insurance in one or more states, the state designated by the insurer in writing filed with the office at the time of admission to this state or within 6 months after the effective date of this code, whichever date is the later, and may be any of the following states:

(a) That in which the insurer was first authorized to transact insurance if the insurer is still so authorized.

(b) That in which is located the insurer’s principal place of business in the United States.

(c) That in which is held the larger deposit of trusteed assets of the insurer for the protection of its policyholders and creditors in the United States.

If the insurer makes no such designation, its domicile shall be deemed to be that state in which is located its principal place of business in the United States.

(3) As to alien insurers not authorized to transact insurance in one or more states, the country under the laws of which the insurer was formed.

(4) As to all other insurers, the state under the laws of which the insurer was formed.

§624.075 FS | Commercially Domiciled Insurer Defined

Every foreign or alien insurer which is authorized to do business in this state and which, during its 3 preceding fiscal years taken together, or during any lesser period of time if it has been licensed to transact its business in this state only for the lesser period of time, has written an average of 25 percent or more direct premiums in this state than it has written in its state of domicile during the same period, and the direct premiums written constitute more than 55 percent of its total direct premiums written everywhere in the United States during its 3 preceding fiscal years taken together, or during any lesser period of time if it has been authorized to transact its business in this state only for the lesser period of time, as reported in its most recent applicable annual or quarterly statements, shall be deemed a “commercially domiciled insurer” within this state.

§624.08 FS | State Defined

When used in context signifying a jurisdiction other than the State of Florida, “state” means any state, district, territory, or commonwealth of the United States.

§624.09 FS | Authorized, "Unauthorized" Insurer Defined

(1) An “authorized” insurer is one duly authorized by a subsisting certificate of authority issued by the office to transact insurance in this state.

(2) An “unauthorized” insurer is one not so authorized.

§624.10 FS | Other Definitions

As used in the Florida Insurance Code, the term:

(1) “Affiliate” means an entity that exercises control over or is directly or indirectly controlled by the insurer through:

(a) Equity ownership of voting securities;

(b) Common managerial control; or

(c) Collusive participation by the management of the insurer and affiliate in the management of the insurer or the affiliate.

(2) “Affiliated person” of another person means:

(a) The spouse of the other person;

(b) The parents of the other person and their lineal descendants, or the parents of the other person’s spouse and their lineal descendants;

(c) A person who directly or indirectly owns or controls, or holds with the power to vote, 10 percent or more of the outstanding voting securities of the other person;

(d) A person, 10 percent or more of whose outstanding voting securities are directly or indirectly owned or controlled, or held with power to vote, by the other person;

(e) A person or group of persons who directly or indirectly control, are controlled by, or are under common control with the other person;

(f) An officer, director, partner, copartner, or employee of the other person;

(g) If the other person is an investment company, an investment adviser of such company, or a member of an advisory board of such company;

(h) If the other person is an unincorporated investment company not having a board of directors, the depositor of such company; or

(i) A person who has entered into a written or unwritten agreement to act in concert with the other person in acquiring or limiting the disposition of securities of a domestic stock insurer or controlling company.

(3) “Control,” including the terms “controlling,” “controlled by,” and “under common control with,” means the direct or indirect possession of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise. Control is presumed to exist if a person, directly or indirectly, owns, controls, holds with the power to vote, or holds proxies representing 10 percent or more of the voting securities of another person.

(4) “NAIC” means the National Association of Insurance Commissioners.

(5) “Transact” with respect to insurance includes any of the following, in addition to other applicable provisions of this code:

(a) Solicitation or inducement.

(b) Preliminary negotiations.

(c) Effectuation of a contract of insurance.

(d) Transaction of matters subsequent to effectuation of a contract of insurance and arising out of it.

§624.105 FS | Waiver of Customer Liability

Any regulated company as defined in s. 350.111, any electric utility as defined in s. 366.02(4), any utility as defined in s. 367.021(12) or s. 367.022(2) and (7), and any provider of communications services as defined in s. 202.11(1) may charge for and include an optional waiver of liability provision in their customer contracts under which the entity agrees to waive all or a portion of the customer’s liability for service from the entity for a defined period in the event of the customer’s call to active military service, death, disability, involuntary unemployment, qualification for family leave, or similar qualifying event or condition. Such provisions may not be effective in the customer’s contract with the entity unless affirmatively elected by the customer. No such provision shall constitute insurance so long as the provision is a contract between the entity and its customer.

§624.1055 FS | Right of Contribution Among Liability Insurers for Defense Costs

A liability insurer who owes a duty to defend an insured and who defends the insured against a claim, suit, or other action has a right of contribution for defense costs against any other liability insurer who owes a duty to defend the insured against the same claim, suit, or other action, provided that contribution may not be sought from any liability insurer for defense costs that are incurred before the liability insurer’s receipt of notice of the claim, suit, or other action.

(1) APPORTIONMENT OF COSTS.

The court shall allocate defense costs among liability insurers who owe a duty to defend the insured against the same claim, suit, or other action in accordance with the terms of the liability insurance policies. The court may use such equitable factors as the court determines are appropriate in making such allocation.

(2) ENFORCEMENT OF RIGHT OF CONTRIBUTION.

A liability insurer who is entitled to contribution from another liability insurer under this section may file an action for contribution in a court of competent jurisdiction.

(3) CONSTRUCTION.

(a) This section is not intended to alter any terms of a liability insurance policy or to create any additional duty on the part of a liability insurer to an insured.

(b) An insured may not rely on this section as grounds for a complaint against a liability insurer.

(4) APPLICABILITY.

This section applies to liability insurance policies issued for delivery in this state, or liability insurance policies under which an insurer has a duty to defend an insured against claims asserted or suits or actions filed in this state. Such liability insurance policies include surplus lines insurance policies authorized under the Surplus Lines Law, ss. 626.913-626.937.

(5) EXCEPTION.

Notwithstanding subsection (4), this section does not apply to motor vehicle liability insurance or medical professional liability insurance.

§624.11 FS | Compliance Required

(1) No person shall transact insurance in this state, or relative to a subject of insurance resident, located, or to be performed in this state, without complying with the applicable provisions of this code.

(2) Any risk retention group organized and existing under the provisions of the Product Liability Risk Retention Act of 1981 (Pub. L. No. 97-45), which has been licensed as an insurance company and authorized to engage in the business of insurance may transact insurance in this state and shall be subject to the provisions of ss. 624.15, 624.316, 624.418, 624.421, 624.4211, 624.422, 624.509, 626.112, 626.611, 626.621, 626.7315, 626.741, 626.932, 626.938, 626.9541, 627.351, and 627.915; part I of chapter 631; and all other applicable provisions of the laws of this state. Any such group formed in another jurisdiction shall furnish to the office, upon request, a copy of any financial report submitted by the group in the licensing jurisdiction.

§624.115 FS | Referral of Criminal Violations

If, during an investigation or examination, the office has reason to believe that any criminal law of this state has or may have been violated, the office shall refer any relevant records and information to the Division of Investigative and Forensic Services, state or federal law enforcement, or prosecutorial agencies, as applicable, and shall provide investigative assistance to those agencies as required.

§624.12 FS | Application of Code as to Fraternal Benefit Societies

No provision of this code shall apply with respect to fraternal benefit societies (as identified in chapter 632), except as stated in chapter 632.

§624.123 FS | Certain International Health Insurance Policies; Exemption from Code

(1) International health insurance policies and applications may be solicited and sold in this state at any international airport to a resident of a foreign country. Such international health insurance policies shall be solicited and sold only by a licensed health insurance agent and underwritten only by an admitted insurer. For purposes of this subsection:

(a) “International airport” means any airport in Florida with United States Bureau of Customs and Border Protection service, which enplanes more than 1 million passengers per year.

(b) “International health insurance policy” means health insurance, as provided in s. 627.6562(3)(a)2., which is offered to an individual, covering only a resident of a foreign country on an annual basis.

(c) “Resident of a foreign country” does not include any United States citizen, any natural person maintaining his or her residence in this country, or any natural person staying in this state continuously for more than 120 days.

(2) Any international health insurance policy sold, and any application provided, to residents of foreign countries pursuant to this subsection shall contain the following conspicuous, boldfaced disclaimer in at least 12-point type:

“This individual health insurance policy may be sold only to a person not a resident of the United States. This policy does not comply with coverage, underwriting, and other provisions of the Florida Insurance Code, and must comply with coverage, underwriting, and other insurance regulatory provisions of your country of residence.”

(3) Any insurer underwriting international health insurance policies pursuant to this subsection is subject to all applicable provisions of the insurance code, except as otherwise provided in this subsection. International health insurance policies are not subject to any form approval, rate approval, underwriting restrictions, guaranteed availability, or coverage mandates provided in the insurance code. Health insurance agents who are licensed and appointed pursuant to chapter 626 may solicit, sell, effect, collect premium on, and deliver international health insurance policies in accordance with this section. Solicitation or sale of an international health insurance policy to a United States citizen or to a natural person not a resident of a foreign country is a willful violation of the provisions of s. 626.611.

(4) Any international health insurance policy or application solicited, provided, entered into, issued, or delivered pursuant to this subsection is exempt from all provisions of the insurance code, except that such policy, contract, or agreement is subject to the provisions of ss. 624.155, 624.316, 624.3161, 626.951, 626.9511, 626.9521, 626.9541, 626.9551, 626.9561, 626.9571, 626.9581, 626.9591, 626.9601, 627.413, 627.4145, and 627.6043.

§624.124 FS | Motor Vehicle Services; Exemption from Code

Any person may, in exchange for fees, dues, charges, or other consideration, provide any of the following services related to the ownership, operation, use, or maintenance of a motor vehicle without being deemed an insurer and without being subject to the provisions of this code:

(1) Towing service.

(2) Procuring from an insurer group coverage for bail and arrest bonds or for accidental death and dismemberment.

(3) Emergency service.

(4) Procuring prepaid legal services, or providing reimbursement for legal services, except that this shall not be deemed to be an exemption from chapter 642.

(5) Offering assistance in locating or recovering stolen or missing motor vehicles.

(6) Paying emergency living and transportation expenses of the owner of a motor vehicle when the motor vehicle is damaged.

For purposes of this section, “motor vehicle” has the same meaning specified by s. 634.011(6).

§624.125 FS | Certain Motor Vehicle Service Agreements; Exemption from Code

(1) Any person may, in exchange for fees, charges, or other consideration, solicit, offer, provide, enter into, issue, or deliver a motor vehicle service agreement indemnifying the service agreement holder against loss caused by the failure of any mechanical or component part or parts of a motor vehicle listed in the agreement arising out of the ownership, operation, and use of such motor vehicle when:

(a)

1. The premium charged for the motor vehicle service agreement does not exceed a total of $50 annually or $50 for the term of the agreement; or

2. The difference in the price of substantially similar parts, or service connected therewith, sold with and without the agreement does not exceed a total of $50 annually or $50 for the term of the agreement;

(b) The agreement is entered into incidentally to the sale of the part or parts or to the service connected therewith by the person soliciting, offering, providing, entering into, issuing, or delivering the motor vehicle service agreement; and

(c) No other agreements are solicited, offered, provided, entered into, issued, or delivered by such person at any time on any other mechanical or component part or parts or service connected therewith on the same motor vehicle where the total of all payments exceeds $50 annually or $50 for the term of the agreement; without being deemed an insurer and without being subject to the provisions of this code, provided that the agreement is not renewable or subject to extension or extendible.

(2) Any person soliciting, offering, providing, entering into, issuing, or delivering a motor vehicle service agreement without being deemed an insurer and without being subject to this code pursuant to subsection (1) shall, as to any such agreement, be subject to the provisions of the Florida Deceptive and Unfair Trade Practices Act, part II of chapter 501.

§624.126 FS | Certain Mutual Aid Associations; Exemption from Code

(1) Any beneficial, relief, or mutual aid society, however organized, established prior to 1935 and formed by a religious organization, which religious organization qualifies as an exempt religious organization under Title 26, s. 501, of the Internal Revenue Code, and which society is formed for the purpose of aiding members who sustain property losses, and in which the coverages, privileges, and memberships in the society are confined to members of the religious organization, is exempt from the provisions of this code except as otherwise provided in this section, and to that extent any such society shall not be deemed to be an insurer.

(2) Any person soliciting, offering, providing, entering into, issuing, or delivering a contract or agreement providing membership in a society pursuant to subsection (1) shall, as to any such contract or agreement, be subject to the provisions of ss. 626.951, 626.9511, 626.9521, 626.9541, 626.9551, 626.9561, 626.9571, 626.9581, 626.9591, 626.9601, and 626.9631.

§624.1265 FS | Nonprofit Religious Organization Exemption; Authority; Notice

(1) A nonprofit religious organization is not subject to the requirements of the Florida Insurance Code if the nonprofit religious organization:

(a) Qualifies under Title 26, s. 501 of the Internal Revenue Code of 1986, as amended;

(b) Limits its participants to those members who share a common set of ethical or religious beliefs;

(c) Acts as a facilitator among participants who have financial, physical, or medical needs to assist those with financial, physical, or medical needs in accordance with criteria established by the nonprofit religious organization;

(d) Provides for the financial or medical needs of a participant through contributions from other participants, or through payments directly from one participant to another participant;

(e) Provides amounts that participants may contribute, with no assumption of risk and no promise to pay:

1. Among the participants; or

2. By the nonprofit religious organization to the participants;

(f) Provides a monthly accounting to the participants of the total dollar amount of qualified needs actually shared in the previous month in accordance with criteria established by the nonprofit religious organization;

(g) Conducts an annual audit that is performed by an independent certified public accounting firm in accordance with generally accepted accounting principles and that is made available to the public by providing a copy upon request or by posting on the nonprofit religious organization’s website; and

(h) Does not market or sell health plans through agents licensed by the department under chapter 626.

(2) This section does not prevent:

(a) A participant from limiting the financial or medical needs that may be eligible for payment; or

(b) The nonprofit religious organization from canceling the membership of a participant when such participant indicates his or her unwillingness to participate by failing to meet the conditions of membership for a period in excess of 60 days.

(3) The nonprofit religious organization shall provide a written disclaimer on or accompanying all applications and guideline materials distributed by or on behalf of the nonprofit religious organization. The disclaimer must read in substance:

“Notice: The organization facilitating the sharing of medical expenses is not an insurance company, and neither its guidelines nor its plan of operation is an insurance policy. Membership is not offered through an insurance company, and the organization is not subject to the regulatory requirements or consumer protections of the Florida Insurance Code. Whether anyone chooses to assist you with your medical bills will be totally voluntary because no other participant is compelled by law to contribute toward your medical bills. As such, participation in the organization or a subscription to any of its documents should never be considered to be insurance. Regardless of whether you receive any payments for medical expenses or whether this organization continues to operate, you are always personally responsible for the payment of your own medical bills.”

§624.127 FS | Certain Political Subdivisions Offering Prepaid Ambulance Service Plans; Exemption from Code

A political subdivision of this state which, on October 1, 1991, was operating an emergency medical services system established by special act and offers a prepaid ambulance service plan as part of its emergency medical services system shall, with respect to the prepaid ambulance services plan, be exempt from the provisions of the Florida Insurance Code.

§624.1275 FS | Insurance Agents; Prohibited Exclusion from Public Bidding and Negotiations

A licensed insurance agent shall not be prohibited or excluded from competing or negotiating for any insurance product or plan purchased, provided, or endorsed by a state agency or any political subdivision of this state on the basis of the compensation, contractual or employment arrangement granted to the agent by an employer, insurer, or licensed agency. The term “political subdivision” has the same meaning set forth in s. 1.01.

§624.128 FS | Crime Victims Exemption

Any other provision of the Florida Statutes to the contrary notwithstanding, the deductible or copayment provision of any insurance policy shall not be applicable to a person determined eligible pursuant to the Florida Crimes Compensation Act, excluding s. 960.28.

§624.129 FS | Certain Location and Recovery Services; Exemption from Code

(1) Any person may, in exchange for fees, dues, charges, or other consideration, not exceeding $300 annually (adjusted for increases in the Consumer Price Index after 1994) for each covered individual, provide services involving the registration of natural persons and related services identified in this section concerning the location and recovery of natural persons who are lost, missing, or abducted, without being deemed an insurer and without being subject to the provisions of this code.

(2) For purposes of this section, the following shall be considered services related to the registration of natural persons:

(a) Obtaining, compiling, storing, and retrieving biographical, statistical, pictorial, and similar information regarding natural persons desiring such services.

(b) Providing educational, preventive, or remedial information or assistance relating to the possibility of natural persons being or becoming missing, lost, or abducted.

(c) Contacting, assisting, or obtaining assistance from law enforcement officials, organizations concerned with missing persons, or the media regarding the search for and location and recovery of a natural person reported missing.

(d) Providing or arranging to provide investigative, psychological, or social services and assistance in connection with the search for and location and recovery of a natural person reported missing.

(e) In the discretion of the provider and as part of its investigative or search methods, offering a reward (but not a ransom) for information leading to the location or recovery of a natural person who is lost, missing, or abducted.

(3) The written agreement or enrollment form used by the provider of such services for subscribers in this state shall contain a conspicuous legend to the effect that the services are not regulated by either the department or the office as insurance.

(4) Any person soliciting, offering, providing, entering into, issuing, or delivering an agreement for services under this section, without being deemed an insurer and without being subject to this code pursuant to subsection (1), shall, as to any such agreement, be subject to the provisions of the Florida Deceptive and Unfair Trade Practices Act, part II of chapter 501.

§624.13 FS | Particular Provisions Prevail

Provisions of this code relative to a particular kind of insurance or a particular type of insurer or to a particular matter shall prevail over provisions relating to insurance in general or insurers in general or to such matter in general.

§624.15 FS | General Penalty

(1) Each willful violation of this code or rule of the department, office, or commission as to which a greater penalty is not provided by another provision of this code or rule of the department, office, or commission or by other applicable laws of this state is a misdemeanor of the second degree and is, in addition to any prescribed applicable denial, suspension, or revocation of certificate of authority, license, or permit, punishable as provided in s. 775.082 or s. 775.083. Each instance of such violation shall be considered a separate offense.

(2) Each willful violation of an emergency rule or order of the department, office, or commission by a person who is not licensed, authorized, or eligible to engage in business in accordance with the Florida Insurance Code is a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084. Each instance of such violation is a separate offense. This subsection does not apply to licensees or affiliated parties of licensees.

§624.155 FS | Civil Remedy

(1) Any person may bring a civil action against an insurer when such person is damaged:

(a) By a violation of any of the following provisions by the insurer:

1. Section 626.9541(1)(i), (o), or (x);

2. Section 626.9551;

3. Section 626.9705;

4. Section 626.9706;

5. Section 626.9707; or

6. Section 627.7283.

(b) By the commission of any of the following acts by the insurer:

1. Not attempting in good faith to settle claims when, under all the circumstances, it could and should have done so, had it acted fairly and honestly toward its insured and with due regard for her or his interests;

2. Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which payments are being made; or

3. Except as to liability coverages, failing to promptly settle claims, when the obligation to settle a claim has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage.

Notwithstanding the provisions of the above to the contrary, a person pursuing a remedy under this section need not prove that such act was committed or performed with such frequency as to indicate a general business practice.

(2) Any party may bring a civil action against an unauthorized insurer if such party is damaged by a violation of s. 624.401 by the unauthorized insurer.

(3)

(a) As a condition precedent to bringing an action under this section, the department and the authorized insurer must have been given 60 days’ written notice of the violation. Notice to the authorized insurer must be provided by the department to the e-mail address designated by the insurer under s. 624.422.

(b) The notice shall be on a form provided by the department and shall state with specificity the following information, and such other information as the department may require:

1. The statutory provision, including the specific language of the statute, which the authorized insurer allegedly violated.

2. The facts and circumstances giving rise to the violation.

3. The name of any individual involved in the violation.

4. Reference to specific policy language that is relevant to the violation, if any. If the person bringing the civil action is a third party claimant, she or he shall not be required to reference the specific policy language if the authorized insurer has not provided a copy of the policy to the third party claimant pursuant to written request.

5. A statement that the notice is given in order to perfect the right to pursue the civil remedy authorized by this section.

(c) No action shall lie if, within 60 days after the insurer receives notice from the department in accordance with this subsection, the damages are paid or the circumstances giving rise to the violation are corrected.

(d) The authorized insurer that is the recipient of a notice filed pursuant to this section shall report to the department on the disposition of the alleged violation.

(e) The applicable statute of limitations for an action under this section shall be tolled for a period of:

1. Sixty days after the insurer receives from the department the notice required by this subsection.

2. Sixty days after the date appraisal is invoked pursuant to paragraph (f).

(f) A notice required under this subsection may not be filed within 60 days after appraisal is invoked by any party in a residential property insurance claim.

(4)

(a) An action for bad faith involving a liability insurance claim, including any such action brought under the common law, shall not lie if the insurer tenders the lesser of the policy limits or the amount demanded by the claimant within 90 days after receiving actual notice of a claim which is accompanied by sufficient evidence to support the amount of the claim.

(b) If an insurer does not tender the lesser of the policy limits or the amount demanded by the claimant within the 90-day period provided in paragraph (a), the existence of the 90-day period and that no bad faith action could lie had the insurer tendered the lesser of policy limits or the amount demanded by the claimant pursuant to paragraph (a) is inadmissible in any action seeking to establish bad faith on the part of the insurer.

(c) If the insurer fails to tender pursuant to paragraph (a) within the 90-day period, any applicable statute of limitations is extended for an additional 90 days.

(5) In any bad faith action, whether such action is brought under this section or is based on the common-law remedy for bad faith:

(a) Mere negligence alone is insufficient to constitute bad faith.

(b)

1. The insured, claimant, and representative of the insured or claimant have a duty to act in good faith in furnishing information regarding the claim, in making demands of the insurer, in setting deadlines, and in attempting to settle the claim. This duty does not create a separate cause of action, but may only be considered pursuant to subparagraph 2.

2. In any action for bad faith against an insurer, the trier of fact may consider whether the insured, claimant, or representative of the insured or claimant did not act in good faith pursuant to this paragraph, in which case the trier of fact may reasonably reduce the amount of damages awarded against the insurer.

(6) If two or more third-party claimants have competing claims arising out of a single occurrence, which in total may exceed the available policy limits of one or more of the insured parties who may be liable to the third-party claimants, an insurer is not liable beyond the available policy limits for failure to pay all or any portion of the available policy limits to one or more of the third-party claimants if, within 90 days after receiving notice of the competing claims in excess of the available policy limits, the insurer complies with either paragraph (a) or paragraph (b):

(a) The insurer files an interpleader action under the Florida Rules of Civil Procedure. If the claims of the competing third-party claimants are found to be in excess of the policy limits, the third-party claimants are entitled to a prorated share of the policy limits as determined by the trier of fact. An insurer’s interpleader action does not alter or amend the insurer’s obligation to defend its insured.

(b) Pursuant to binding arbitration that has been agreed to by the insurer and the third-party claimants, the insurer makes the entire amount of the policy limits available for payment to the competing third-party claimants before a qualified arbitrator agreed to by the insurer and such third-party claimants at the expense of the insurer. The third-party claimants are entitled to a prorated share of the policy limits as determined by the arbitrator, who must consider the comparative fault, if any, of each third-party claimant, and the total likely outcome at trial based upon the total of the economic and noneconomic damages submitted to the arbitrator for consideration. A third-party claimant whose claim is resolved by the arbitrator must execute and deliver a general release to the insured party whose claim is resolved by the proceeding.

(7) Upon adverse adjudication at trial or upon appeal, the authorized insurer shall be liable for damages, together with court costs and reasonable attorney fees incurred by the plaintiff.

(8) Punitive damages may not be awarded under this section unless the acts giving rise to the violation occur with such frequency as to indicate a general business practice and these acts are:

(a) Willful, wanton, and malicious;

(b) In reckless disregard for the rights of any insured; or

(c) In reckless disregard for the rights of a beneficiary under a life insurance contract.

Any person who pursues a claim under this subsection shall post in advance the costs of discovery. Such costs shall be awarded to the authorized insurer if no punitive damages are awarded to the plaintiff.

(9) This section does not authorize a class action suit against an authorized insurer or a civil action against the commission, the office, or the department or any of their employees, or to create a cause of action when an authorized health insurer refuses to pay a claim for reimbursement on the ground that the charge for a service was unreasonably high or that the service provided was not medically necessary.

(10) In the absence of expressed language to the contrary, this section shall not be construed to authorize a civil action or create a cause of action against an authorized insurer or its employees who, in good faith, release information about an insured or an insurance policy to a law enforcement agency in furtherance of an investigation of a criminal or fraudulent act relating to a motor vehicle theft or a motor vehicle insurance claim.

(11) The civil remedy specified in this section does not preempt any other remedy or cause of action provided for pursuant to any other statute or pursuant to the common law of this state. Any person may obtain a judgment under either the common-law remedy of bad faith or this statutory remedy, but is not entitled to a judgment under both remedies. This section does not create a common-law cause of action. The damages recoverable pursuant to this section shall include those damages which are a reasonably foreseeable result of a specified violation of this section by the authorized insurer and may include an award or judgment in an amount that exceeds the policy limits.

(12) A surety issuing a payment or performance bond on the construction or maintenance of a building or roadway project is not an insurer for purposes of subsection (1).

§624.1551 FS | Civil Remedy Actions Against Property Insurers

Notwithstanding any provision of s. 624.155 to the contrary, in any claim for extracontractual damages under s. 624.155(1)(b), no action shall lie until a named or omnibus insured or a named beneficiary has established through an adverse adjudication by a court of law that the property insurer breached the insurance contract and a final judgment or decree has been rendered against the insurer. Acceptance of an offer of judgment under s. 768.79 or the payment of an appraisal award does not constitute an adverse adjudication under this section. The difference between an insurer’s appraiser’s final estimate and the appraisal award may be evidence of bad faith under s. 624.155(1)(b), but is not deemed an adverse adjudication under this section and does not, on its own, give rise to a cause of action.

§624.1552 FS | Civil Actions Involving an Insurance Contract; Applicability of Offer of Judgment Provisions

The provisions of s. 768.79 apply to any civil action involving an insurance contract.

§624.19 FS | Existing Forms and Filings

Every form of insurance document and every rate or other filing lawfully in use immediately prior to October 1, 1959, may continue to be so used or be effective until the commission or office otherwise prescribes pursuant to this code.

§624.21 FS | Prospective Operation of Amendments to Code

Each amendment to this code shall be construed to operate prospectively, unless a contrary legislative intent is specified.

§624.215 FS | Proposals for Legislation Which Mandates Health Benefit Coverage; Review by Legislature

(1) LEGISLATIVE INTENT.

The Legislature finds that there is an increasing number of proposals which mandate that certain health benefits be provided by insurers and health maintenance organizations as components of individual and group policies. The Legislature further finds that many of these benefits provide beneficial social and health consequences which may be in the public interest. However, the Legislature also recognizes that most mandated benefits contribute to the increasing cost of health insurance premiums. Therefore, it is the intent of the Legislature to conduct a systematic review of current and proposed mandated or mandatorily offered health coverages and to establish guidelines for such a review. This review will assist the Legislature in determining whether mandating a particular coverage is in the public interest.

(2) MANDATED HEALTH COVERAGE; REPORT TO AGENCY FOR HEALTH CARE ADMINISTRATION AND LEGISLATIVE COMMITTEES; GUIDELINES FOR ASSESSING IMPACT.

Every person or organization seeking consideration of a legislative proposal which would mandate a health coverage or the offering of a health coverage by an insurance carrier, health care service contractor, or health maintenance organization as a component of individual or group policies, shall submit to the Agency for Health Care Administration and the legislative committees having jurisdiction a report which assesses the social and financial impacts of the proposed coverage. Guidelines for assessing the impact of a proposed mandated or mandatorily offered health coverage, to the extent that information is available, shall include:

(a) To what extent is the treatment or service generally used by a significant portion of the population.

(b) To what extent is the insurance coverage generally available.

(c) If the insurance coverage is not generally available, to what extent does the lack of coverage result in persons avoiding necessary health care treatment.

(d) If the coverage is not generally available, to what extent does the lack of coverage result in unreasonable financial hardship.

(e) The level of public demand for the treatment or service.

(f) The level of public demand for insurance coverage of the treatment or service.

(g) The level of interest of collective bargaining agents in negotiating for the inclusion of this coverage in group contracts.

(h) To what extent will the coverage increase or decrease the cost of the treatment or service.

(i) To what extent will the coverage increase the appropriate uses of the treatment or service.

(j) To what extent will the mandated treatment or service be a substitute for a more expensive treatment or service.

(k) To what extent will the coverage increase or decrease the administrative expenses of insurance companies and the premium and administrative expenses of policyholders.

(l) The impact of this coverage on the total cost of health care.

§624.23 FS | Public Records Exemption

(1) As used in this section, the term:

(a) “Consumer” means:

1. A prospective purchaser, purchaser, or beneficiary of, or applicant for, any product or service regulated under the Florida Insurance Code, and a family member or dependent of a consumer.

2. An employee seeking assistance from the Employee Assistance and Ombudsman Office under s. 440.191.

(b) “Personal financial and health information” means:

1. A consumer’s personal health condition, disease, or injury;

2. A history of a consumer’s personal medical diagnosis or treatment;

3. The existence, nature, source, or amount of a consumer’s personal income or expenses;

4. Records of or relating to a consumer’s personal financial transactions of any kind;

5. The existence, identification, nature, or value of a consumer’s assets, liabilities, or net worth;

6. The existence or content of, or any individual coverage or status under a consumer’s beneficial interest in, any insurance policy or annuity contract; or

7. The existence, identification, nature, or value of a consumer’s interest in any insurance policy, annuity contract, or trust.

(2) Personal financial and health information held by the department or office relating to a consumer’s complaint or inquiry regarding a matter or activity regulated under the Florida Insurance Code or s. 440.191 are confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution. This exemption applies to personal financial and health information held by the department or office before, on, or after the effective date of this exemption.

(3) Such confidential and exempt information may be disclosed to:

(a) Another governmental entity, if disclosure is necessary for the receiving entity to perform its duties and responsibilities.

(b) The National Association of Insurance Commissioners.

(c) The consumer or the consumer’s legally authorized representative.

Notes

Former s. 627.3111.

§624.231 FS | Disclosure and Fees for Production of Records

If the department or office determines that any portion of a record that is requested by a person is exempt pursuant to chapter 119, the insurance code, or chapter 641, the department or office shall disclose to the person in writing that the requested record will be provided in a redacted format and that there will be additional fees charged for staff time associated with researching and redacting the exempt portion of the record. Before the department or office provides the record, the person must affirm his or her request to receive the record.

§624.24 FS | Prohibition Against Requiring the Purchase of Health Insurance; Exceptions

(1) A person may not be compelled to purchase health insurance, except as a condition of:

(a) Public employment;

(b) Voluntary participation in a state or local benefit;

(c) Operating a dangerous instrumentality;

(d) Undertaking an occupation having a risk of occupational injury or illness;

(e) An order of child support; or

(f) Activity between private persons.

(2) This section does not prohibit the collection of debts lawfully incurred for health insurance.

§624.25 FS | Patient Protection and Affordable Care Act

A provision of the Florida Insurance Code, or rule adopted pursuant to the code, applies unless such provision or rule prevents the application of a provision of PPACA. As used in this section, the term “PPACA” has the same meaning as provided in s. 627.402.

§624.26 FS | Collaborative Arrangement with the Department of Health and Human Services

(1) As used in this section, the term “PPACA” has the same meaning as provided in s. 627.402.

(2) When reviewing forms filed by health insurers or health maintenance organizations pursuant to s. 627.410 or s. 641.31(3) for compliance with state law, the office may also review such forms for compliance with PPACA. If the office determines that a form does not comply with PPACA, the office shall inform the insurer or organization of the reason for noncompliance. If the office determines that a form ultimately used by an insurer or organization does not comply with PPACA, the office may report such potential violation to the federal Department of Health and Human Services. The review of forms by the office under this subsection does not include review of the rates, rating practices, or the relationship of benefits to the rates.

(3) When performing market conduct examinations or investigations of health insurers or health maintenance organizations as authorized under s. 624.307, s. 624.3161, or s. 641.3905 for compliance with state law, the office may include compliance with PPACA within the scope of such examination or investigation. If the office determines that an insurer’s or organization’s operations do not comply with PPACA, the office shall inform the insurer or organization of the reason for such determination. If the insurer or organization does not take action to comply with PPACA, the office may report such potential violation to the federal Department of Health and Human Resources.

(4) The department’s Division of Consumer Services may respond to complaints by consumers relating to a requirement of PPACA and report apparent or potential violations to the office and to the federal Department of Health and Human Services.

(5) A determination made by the office or department pursuant to this section regarding compliance with PPACA does not constitute a determination that affects the substantial interests of any party for purposes of chapter 120.

§624.27 FS | Direct Health Care Agreements; Exemption from Code

(1) As used in this section, the term:

(a) “Direct health care agreement” means a contract between a health care provider and a patient, a patient’s legal representative, or a patient’s employer, which meets the requirements of subsection (4) and does not indemnify for services provided by a third party.

(b) “Health care provider” means a health care provider licensed under chapter 458, chapter 459, chapter 460, chapter 461, chapter 464,¹ chapter 466, chapter 490, or chapter 491, or a health care group practice, who provides health care services to patients.

(c) “Health care services” means the screening, assessment, diagnosis, and treatment of a patient conducted within the competency and training of the health care provider for the purpose of promoting health or detecting and managing disease or injury.

(2) A direct health care agreement does not constitute insurance and is not subject to the Florida Insurance Code. The act of entering into a direct health care agreement does not constitute the business of insurance and is not subject to the Florida Insurance Code.

(3) A health care provider or an agent of a health care provider is not required to obtain a certificate of authority or license under the Florida Insurance Code to market, sell, or offer to sell a direct health care agreement.

(4) For purposes of this section, a direct health care agreement must:

(a) Be in writing.

(b) Be signed by the health care provider or an agent of the health care provider and the patient, the patient’s legal representative, or the patient’s employer.

(c) Allow a party to terminate the agreement by giving the other party at least 30 days’ advance written notice. The agreement may provide for immediate termination due to a violation of the physician-patient relationship or a breach of the terms of the agreement.

(d) Describe the scope of health care services that are covered by the monthly fee.

(e) Specify the monthly fee and any fees for health care services not covered by the monthly fee.

(f) Specify the duration of the agreement and any automatic renewal provisions.

(g) Offer a refund to the patient, the patient’s legal representative, or the patient’s employer of monthly fees paid in advance if the health care provider ceases to offer health care services for any reason.

(h) Contain, in contrasting color and in at least 12-point type, the following statement on the signature page:

“This agreement is not health insurance and the health care provider will not file any claims against the patient’s health insurance policy or plan for reimbursement of any health care services covered by the agreement. This agreement does not qualify as minimum essential coverage to satisfy the individual shared responsibility provision of the Patient Protection and Affordable Care Act, 26 U.S.C. s. 5000A. This agreement is not workers’ compensation insurance and does not replace an employer’s obligations under chapter 440.”

Notes

The word “or” preceding the cite to chapter 466 was deleted by the editors to conform to context.

Chapter 624 Part II FS
DEPARTMENT OF FINANCIAL SERVICES

§624.302 FS | Offices

The department shall establish and maintain offices at the State Capitol in Tallahassee, and in such other places throughout the state as it designates. The Office of Insurance Regulation shall establish and maintain offices in Tallahassee and in such other places throughout the state as it designates.

§624.303 FS | Seal; Certified Copies As Evidence

(1) The department, commission, and office shall each have an official seal by which its respective proceedings are authenticated.

(2) All certificates executed by the department or office, other than licenses of agents, or adjusters or similar licenses or permits, shall bear its respective seal.

(3) Any written instrument purporting to be a copy of any action, proceeding, or finding of fact by the department, commission, or office or any record of the department, commission, or office or copy of any document on file in its office when authenticated under hand of the respective agency head or his or her designee by the seal shall be accepted by all the courts of this state as prima facie evidence of its contents.

§624.307 FS | General Powers; Duties

(1) The department and office shall enforce the provisions of this code and shall execute the duties imposed upon them by this code, within the respective jurisdiction of each, as provided by law.

(2) The department shall have the powers and authority expressly conferred upon it by, or reasonably implied from, the provisions of this code. The office shall have the powers and authority expressly conferred upon it by, or reasonably implied from, the provisions of this code.

(3) The department or office may conduct such investigations of insurance matters, in addition to investigations expressly authorized, as it may deem proper to determine whether any person has violated any provision of this code within its respective regulatory jurisdiction or to secure information useful in the lawful administration of any such provision. The cost of such investigations shall be borne by the state.

(4) The department and office may each collect, propose, publish, and disseminate information relating to the subject matter of any duties imposed upon it by law.

(a) Aggregate information may include information asserted as trade secret information unless the trade secret information can be individually extrapolated, in which case the trade secret information remains protected as provided under s. 624.4213.

(b) The office shall publish all orders, data required by s. 627.915(2), reports required by s. 627.7154(3), and all reports that are not confidential and exempt on its website in a timely fashion.

(5) The department and office shall each have such additional powers and duties as may be provided by other laws of this state.

(6) The department and office may each employ actuaries who shall be at-will employees and who shall serve at the pleasure of the Chief Financial Officer, in the case of department employees, or at the pleasure of the director of the office, in the case of office employees. Actuaries employed pursuant to this paragraph shall be members of the Society of Actuaries or the Casualty Actuarial Society and shall be exempt from the Career Service System established under chapter 110. The salaries of the actuaries employed pursuant to this paragraph shall be set at levels which are commensurate with salary levels paid to actuaries by the insurance industry.

(7) The department and office, within existing resources, may expend funds for the professional development of their employees, including, but not limited to, professional dues for employees who are required to be members of professional organizations; examinations leading to professional designations required for employment with the office; training courses and examinations provided through, and to ensure compliance with, the National Association of Insurance Commissioners; or other training courses related to the regulation of insurance.

(8) The office shall, within existing resources, develop and implement an outreach program for the purpose of encouraging the entry of additional insurers into the Florida market.

(9) Upon receiving service of legal process issued in any civil action or proceeding in this state against any regulated person or any unauthorized insurer under s. 626.906 or s. 626.937 that is required to appoint the Chief Financial Officer as its agent to receive service of all legal process, the Chief Financial Officer shall make the process available through a secure online portal established by the department to the person last designated by the regulated person or the unauthorized insurer to receive the process. When process documents are made available electronically, the Chief Financial Officer shall promptly send a notice of receipt of service of process to the person last designated by the regulated person or unauthorized insurer to receive legal process. The notice must state the date the process was made available to the regulated person or unauthorized insurer being served and contain the uniform resource locator (URL) where the process may be obtained.

(10)

(a) The Division of Consumer Services shall perform the following functions concerning products or services regulated by the department or office:

1. Receive inquiries and complaints from consumers.

2. Prepare and disseminate information that the department deems appropriate to inform or assist consumers.

3. Provide direct assistance to and advocacy for consumers who request such assistance or advocacy.

4. With respect to apparent or potential violations of law or applicable rules committed by a person or an entity licensed by the department or office, report apparent or potential violations to the office or to the appropriate division of the department, which may take any additional action it deems appropriate.

5. Designate an employee of the division as the primary contact for consumers on issues relating to sinkholes.

6. Designate an employee of the division as the primary contact for consumers and pharmacies on issues relating to pharmacy benefit managers. The division must refer to the office any consumer complaint that alleges conduct that may constitute a violation of part VII of chapter 626 or for which a pharmacy benefit manager does not respond in accordance with paragraph (b).

(b) Any person licensed or issued a certificate of authority or made an eligible surplus lines insurer by the department or the office shall respond, in writing or electronically, to the division within 14 days after receipt of a written request for documents and information from the division concerning a consumer complaint. The response must address the issues and allegations raised in the complaint and include any requested documents concerning the consumer complaint not subject to attorney-client or work-product privilege. The division may impose an administrative penalty for failure to comply with this paragraph of up to $5,000 per violation upon any entity licensed by the department or the office and up to $1,000 per violation by any individual licensed by the department or the office.

(c) Each insurer issued a certificate of authority or made an eligible surplus lines insurer shall file with the department an e-mail address to which requests for response to consumer complaints shall be directed pursuant to paragraph (b). Such insurer shall also designate a contact person for escalated complaint issues and shall provide the name, e-mail address, and telephone number of such person. A licensee of the department, including an agency or a firm, may elect to ¹designate an e-mail address to which requests for response to consumer complaints shall be directed pursuant to paragraph (b). If a licensee, including an agency or a firm, elects not to designate an e-mail address, the department shall direct requests for response to consumer complaints to the e-mail address of record for the licensee in the department’s licensing system. An insurer or a licensee, including an agency or a firm, may change the designated contact information at any time by submitting the new information to the department using the method designated by rule by the department.

(d) The department may adopt rules to administer this subsection.

(e) The powers, duties, and responsibilities expressed or granted in this subsection do not limit the powers, duties, and responsibilities of the department, the Financial Services Commission, the Office of Insurance Regulation, or the Office of Financial Regulation as otherwise provided by law.

Notes

The word “designate” was substituted for the word “designated” by the editors to conform to context.

§624.308 FS | Rules

(1) The department and the commission may each adopt rules pursuant to ss. 120.536(1) and 120.54 to implement provisions of law conferring duties upon the department or the commission, respectively.

(2) In addition to any other penalty provided, willful violation of any such rule shall subject the violator to such suspension or revocation of certificate of authority or license as may be applicable under this code as for violation of the provision as to which such rule relates.

§624.31 FS | Enforcement; Cease And Desist Orders; Removal Of Certain Persons; Fines

(1) DEFINITIONS

For the purposes of this section, the term:

(a) “Affiliated party” means any person who directs or participates in the conduct of the affairs of a licensee and who is:

1. A director, officer, employee, trustee, committee member, or controlling stockholder of a licensee or a subsidiary or service corporation of the licensee, other than a controlling stockholder which is a holding company, or an agent of a licensee or a subsidiary or service corporation of the licensee;

2. A person who has filed or is required to file a statement or any other information required to be filed under s. 628.461 or s. 628.4615;

3. A stockholder, other than a stockholder that is a holding company of the licensee, who participates in the conduct of the affairs of the licensee;

4. An independent contractor who:

a. Renders a written opinion required by the laws of this state under her or his professional credentials on behalf of the licensee, which opinion is reasonably relied on by the department or office in the performance of its duties; or

b. Affirmatively and knowingly conceals facts, through a written misrepresentation to the department or office, with knowledge that such misrepresentation:

(I) Constitutes a violation of the insurance code or a lawful rule or order of the department, commission, or office; and

(II) Directly and materially endangers the ability of the licensee to meet its obligations to policyholders.

For the purposes of this subparagraph, any representation of fact made by an independent contractor on behalf of a licensee, affirmatively communicated as a representation of the licensee to the independent contractor, shall not be considered a misrepresentation by the independent contractor; or

5. A third-party marketer who aids or abets a licensee in a violation of the insurance code relating to the sale of an annuity to a person 65 years of age or older.

(b) “Licensee” means a person issued a license or certificate of authority or approval under this code or a person registered under a provision of this code.

(2) ENFORCEMENT GENERALLY

(a) The powers granted by this section to the office apply only with respect to licensees of the office and their affiliated parties and to unlicensed persons subject to the regulatory jurisdiction of the office, and the powers granted by this section to the department apply only with respect to licensees of the department and their affiliated parties and to unlicensed persons subject to regulatory jurisdiction of the department.

(b) The department and office each may institute such suits or other legal proceedings as may be required to enforce any provision of this code within the respective regulatory jurisdiction of each. If it appears that any person has violated any provision of this code for which criminal prosecution is provided, the department or office shall provide the appropriate state attorney or other prosecuting agency having jurisdiction with respect to such prosecution with the relevant information in its possession.

(3) CEASE AND DESIST ORDERS

(a) The department or office may issue and serve a complaint stating charges upon any licensee or upon any affiliated party, whenever the department or office has reasonable cause to believe that the person or individual named therein is engaging in or has engaged in conduct that is:

1. An act that demonstrates a lack of fitness or trustworthiness to engage in the business of insurance, is hazardous to the insurance buying public, or constitutes business operations that are a detriment to policyholders, stockholders, investors, creditors, or the public;

2. A violation of any provision of the Florida Insurance Code;

3. A violation of any rule of the department or commission;

4. A violation of any order of the department or office; or

5. A breach of any written agreement with the department or office.

(b) The complaint shall contain a statement of facts and notice of opportunity for a hearing pursuant to ss. 120.569 and 120.57.

(c) If no hearing is requested within the time allowed by ss. 120.569 and 120.57, or if a hearing is held and the department or office finds that any of the charges are proven, the department or office may enter an order directing the licensee or the affiliated party named in the complaint to cease and desist from engaging in the conduct complained of and take corrective action to remedy the effects of past improper conduct and assure future compliance.

(d) If the licensee or affiliated party named in the order fails to respond to the complaint within the time allotted by ss. 120.569 and 120.57, the failure constitutes a default and justifies the entry of a cease and desist order.

(e) A contested or default cease and desist order is effective when reduced to writing and served upon the licensee or affiliated party named therein. An uncontested cease and desist order is effective as agreed.

(f) Whenever the department or office finds that conduct described in paragraph (a) is likely to cause insolvency, substantial dissipation or misvaluation of assets or earnings of the licensee, substantial inability to pay claims on a timely basis, or substantial prejudice to prospective or existing insureds, policyholders, subscribers, or the public, it may issue an emergency cease and desist order requiring the licensee or any affiliated party to immediately cease and desist from engaging in the conduct complained of and to take corrective and remedial action. The emergency order is effective immediately upon service of a copy of the order upon the licensee or affiliated party named therein and remains effective for 90 days. If the department or office begins nonemergency cease and desist proceedings under this subsection, the emergency order remains effective until the conclusion of the proceedings under ss. 120.569 and 120.57. Any emergency order entered under this subsection is exempt from s. 119.07(1) and is confidential until it is made permanent unless the department or office finds that the confidentiality will result in substantial risk of financial loss to the public. All emergency cease and desist orders that are not made permanent are available for public inspection 1 year from the date the emergency cease and desist order expires; however, portions of an emergency cease and desist order remain confidential and exempt from the provisions of s. 119.07(1) if disclosure would:

1. Jeopardize the integrity of another active investigation;

2. Impair the safety and financial soundness of the licensee or affiliated party;

3. Reveal personal financial information;

4. Reveal the identity of a confidential source;

5. Defame or cause unwarranted damage to the good name or reputation of an individual or jeopardize the safety of an individual; or

6. Reveal investigative techniques or procedures.

(4) REMOVAL OF AFFILIATED PARTIES

(a) The department or office may issue and serve a complaint stating charges upon any affiliated party and upon the licensee involved, whenever the department or office has reason to believe that an affiliated party is engaging in or has engaged in conduct that constitutes:

1. An act that demonstrates a lack of fitness or trustworthiness to engage in the business of insurance through engaging in illegal activity or mismanagement of business activities;

2. A willful violation of any law relating to the business of insurance; however, if the violation constitutes a misdemeanor, no complaint shall be served as provided in this section until the affiliated party is notified in writing of the matter of the violation and has been afforded a reasonable period of time, as set forth in the notice, to correct the violation and has failed to do so;

3. A violation of any other law involving fraud or moral turpitude that constitutes a felony;

4. A willful violation of any rule of the department or commission;

5. A willful violation of any order of the department or office;

6. A material misrepresentation of fact, made knowingly and willfully or made with reckless disregard for the truth of the matter; or

7. An act of commission or omission or a practice which is a breach of trust or a breach of fiduciary duty.

(b) The complaint shall contain a statement of facts and notice of opportunity for a hearing pursuant to ss. 120.569 and 120.57.

(c) If no hearing is requested within the time allotted by ss. 120.569 and 120.57, or if a hearing is held and the department or office finds that any of the charges in the complaint are proven true and that:

1. The licensee has suffered or will likely suffer loss or other damage;

2. The interests of the policyholders, creditors, or public are, or could be, seriously prejudiced by reason of the violation or act or breach of fiduciary duty;

3. The affiliated party has received financial gain by reason of the violation, act, or breach of fiduciary duty; or

4. The violation, act, or breach of fiduciary duty is one involving personal dishonesty on the part of the affiliated party or the conduct jeopardizes or could reasonably be anticipated to jeopardize the financial soundness of the licensee,

The department or office may enter an order removing the affiliated party or restricting or prohibiting participation by the person in the affairs of that particular licensee or of any other licensee.

(d) If the affiliated party fails to respond to the complaint within the time allotted by ss. 120.569 and 120.57, the failure constitutes a default and justifies the entry of an order of removal, suspension, or restriction.

(e) A contested or default order of removal, restriction, or prohibition is effective when reduced to writing and served on the licensee and the affiliated party. An uncontested order of removal, restriction, or prohibition is effective as agreed.

(f)

1. The chief executive officer, or the person holding the equivalent office, of a licensee shall promptly notify the department or office that issued the license if she or he has actual knowledge that any affiliated party is charged with a felony in a state or federal court.

2. Whenever any affiliated party is charged with a felony in a state or federal court or with the equivalent of a felony in the courts of any foreign country with which the United States maintains diplomatic relations, and the charge alleges violation of any law involving fraud, theft, or moral turpitude, the department or office may enter an emergency order suspending the affiliated party or restricting or prohibiting participation by the affiliated party in the affairs of the particular licensee or of any other licensee upon service of the order upon the licensee and the affiliated party charged. The order shall contain notice of opportunity for a hearing pursuant to ss. 120.569 and 120.57, where the affiliated party may request a postsuspension hearing to show that continued service to or participation in the affairs of the licensee does not pose a threat to the interests of the licensee’s policyholders or creditors and does not threaten to impair public confidence in the licensee. In accordance with applicable rules, the department or office shall notify the affiliated party whether the order suspending or prohibiting the person from participation in the affairs of a licensee will be rescinded or otherwise modified. The emergency order remains in effect, unless otherwise modified by the department or office, until the criminal charge is disposed of. The acquittal of the person charged, or the final, unappealed dismissal of all charges against the person, dissolves the emergency order, but does not prohibit the department or office from instituting proceedings under paragraph (a). If the person charged is convicted or pleads guilty or nolo contendere, whether or not an adjudication of guilt is entered by the court, the emergency order shall become final.

(g) Any affiliated party removed from office pursuant to this section is not eligible for reelection or appointment to the position or to any other official position in any licensee in this state except upon the written consent of the department or office. Any affiliated party who is removed, restricted, or prohibited from participation in the affairs of a licensee pursuant to this section may petition the department or office for modification or termination of the removal, restriction, or prohibition.

(h) Resignation or termination of an affiliated party does not affect the department’s or office’s jurisdiction to proceed under this subsection.

(5) ADMINISTRATIVE FINES; ENFORCEMENT

(a) The department or office may, in a proceeding initiated pursuant to chapter 120, impose an administrative fine against any person found in the proceeding to have violated any provision of this code, a cease and desist order of the department or office, or any written agreement with the department or office. No proceeding shall be initiated and no fine shall accrue until after the person has been notified in writing of the nature of the violation and has been afforded a reasonable period of time, as set forth in the notice, to correct the violation and has failed to do so.

(b) A fine imposed under this subsection may not exceed the amounts specified in s. 624.4211, per violation.

(c) The department or office may, in addition to the imposition of an administrative fine under this subsection, also suspend or revoke the license or certificate of authority of the licensee fined under this subsection.

(d) Any administrative fine levied by the department or office under this subsection may be enforced by the department or office by appropriate proceedings in the circuit court of the county in which the person resides or in which the principal office of a licensee is located, or, in the case of a foreign insurer or person not residing in this state, in Leon County. In any administrative or judicial proceeding arising under this section, a party may elect to correct the violation asserted by the department or office, and, upon doing so, any fine shall cease to accrue; however, the election to correct the violation does not render any administrative or judicial proceeding moot. All fines collected under this section shall be paid to the Insurance Regulatory Trust Fund.

(e) In imposing any administrative penalty or remedy provided for under this section, the department or office shall take into account the appropriateness of the penalty with respect to the size of the financial resources and the good faith of the person charged, the gravity of the violation, the history of previous violations, and other matters as justice may require.

(f) The imposition of an administrative fine under this subsection may be in addition to any other penalty or administrative fine authorized under this code.

(6) ADMINISTRATIVE PROCEDURES

All administrative proceedings under subsections (3), (4), and (5) shall be conducted in accordance with chapter 120. Any service required or authorized to be made by the department or office under this code shall be made:

(a)

1. By certified mail, return receipt requested, delivered to the addressee only; or

2. If service by certified mail cannot be obtained at the last address provided to the department by the recipient, then by e-mail, delivery receipt required, sent to the most recent e-mail address provided to the department by the applicant or licensee in accordance with s. 626.171, s. 626.551, s. 648.34, or s. 648.421;

(b) By personal delivery, including hand delivery by a department investigator;

(c) By publication in accordance with s. 120.60; or

(d) In accordance with chapter 48.

The service provided for in this subsection shall be effective from the date of delivery.

(7) OTHER LAWS NOT SUPERSEDED

The provisions of this section are in addition to other provisions of this code, and shall not be construed to curtail, impede, replace, or delete any other similar provision or power of the department or office under the insurance code as defined in s. 624.01 or any power of the department or office which may exist under the common law of this state. The procedures set forth in s. 626.9581 do not apply to regulatory action taken pursuant to the provisions of this section.

(8) CRIMINAL ENFORCEMENT

It is unlawful for any affiliated party who is removed or prohibited from participation in the affairs of a licensee pursuant to this section, or for any licensee whose rights or privileges under such license have been suspended or revoked pursuant to the Florida Insurance Code, to knowingly act as an affiliated party as defined in this section or to knowingly transact insurance as defined in s. 624.10 until expressly authorized to do so by the department or office. Such authorization by the department or office may not be provided unless the affiliated party or the licensee has made restitution, if applicable, to all parties damaged by the actions of the affiliated party or the licensee which served as the basis for the removal or prohibition of the affiliated party or the suspension or revocation of the rights and privileges of the licensee. Any person who violates the provisions of this subsection commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083 or s. 775.084.

§624.3102 FS | Immunity From Civil Liability For Providing Department, Commission, Or Office With Information About Condition Of Insurer

A person, other than a person filing a required report or other required information, who provides the department, commission, or office with information about the financial condition of an insurer is immune from civil liability arising out of the provision of the information unless the person acted with knowledge that the information was false or with reckless disregard for the truth or falsity of the information.

§624.311 FS | Records; Reproductions; Destruction

(1) Except as provided in this section, the department, commission, and office shall each preserve in permanent form records of its proceedings, hearings, investigations, and examinations and shall file such records in its office.

(2) The records of insurance claim negotiations of any state agency or political subdivision are confidential and exempt from s. 119.07(1) until termination of all litigation and settlement of all claims arising out of the same incident.

(3) The department, commission, and office may each photograph, microphotograph, or reproduce on film, or maintain in an electronic recordkeeping system, all financial records, financial statements of domestic insurers, reports of business transacted in this state by foreign insurers and alien insurers, reports of examination of domestic insurers, and such other records and documents on file in its office as it may in its discretion select.

(4) To facilitate the efficient use of floor space and filing equipment in its offices, the department, commission, and office may each destroy the following records and documents pursuant to chapter 257:

(a) General closed correspondence files over 3 years old;

(b) Agent, adjuster, and similar license files, including license files of the Division of State Fire Marshal, over 2 years old; except that the department or office shall preserve by reproduction or otherwise a copy of the original records upon the basis of which each such licensee qualified for her or his initial license, except a competency examination, and of any disciplinary proceeding affecting the licensee;

(c) All agent, adjuster, and similar license files and records, including original license qualification records and records of disciplinary proceedings 5 years after a licensee has ceased to be qualified for a license;

(d) Insurer certificate of authority files over 2 years old, except that the office shall preserve by reproduction or otherwise a copy of the initial certificate of authority of each insurer;

(e) All documents and records which have been photographed or otherwise reproduced as provided in subsection (3), if such reproductions have been filed and an audit of the department or office has been completed for the period embracing the dates of such documents and records; and

(f) All other records, documents, and files not expressly provided for in paragraphs (a)-(e).

§624.312 FS | Reproductions And Certified Copies Of Records As Evidence

(1) Photographs or microphotographs in the form of film or prints, or other reproductions from an electronic recordkeeping system, of documents and records made under s. 624.311(3), or made under former s. 624.311(3) before October 1, 1982, shall have the same force and effect as the originals thereof and shall be treated as originals for the purpose of their admissibility in evidence. Duly certified or authenticated reproductions of such photographs, microphotographs, or other reproductions from an electronic recordkeeping system shall be as admissible in evidence as the originals.

(2) Upon the request of any person and payment of the applicable fee, the department, commission, or office shall give a certified copy of any record in its office which is then subject to public inspection.

(3) Copies of original records or documents in its office certified by the department, commission, or office shall be received in evidence in all courts as if they were originals.

§624.313 FS | Publications

(1) As early as reasonably possible, the office shall annually have printed and made available a statistical report which must include all of the following information on either a calendar year or fiscal year basis:

(a) A summary of all information reported to the office under s. 627.915(1).

(b) The total amount of premiums written and earned by line of insurance.

(c) The total amount of losses paid and losses incurred by line of insurance.

(d) The ratio of premiums written to losses paid by line of insurance.

(e) The ratio of premiums earned to losses incurred by line of insurance.

(f) The market share of the 10 largest insurers or insurer groups by line of insurance and of each insurer or insurer group that has a market share of at least 1 percent of a line of insurance in this state.

(g) The profitability of each major line of insurance.

(h) An analysis of the impact of the insurance industry on the economy of the state.

(i) A complaint ratio by line of insurance for the insurers referred to in paragraph (f), based upon information provided to the office by the department. The office shall determine the most appropriate ratio or ratios for quantifying complaints.

(j) An analysis of such lines or kinds of insurance for which the office determines that an availability problem exists in this state, and an analysis of the availability of reinsurance to domestic insurers selling homeowners’ and condominium unit owners’ insurance in this state.

(k) A summary of the findings of market examinations performed by the office under s. 624.3161 during the preceding year.

(l) Such other information as the office deems relevant.

(2) The department may prepare and have printed and published in pamphlet or book form the following:

(a) As needed, questions and answers for the use of persons applying for an examination for licensing as agents for property, casualty, surety, health, and miscellaneous insurers.

(b) As needed, questions and answers for the use of persons applying for an examination for licensing as agents for life and health insurers.

(c) As needed, questions and answers for the use of persons applying for an examination for licensing as adjusters.

(3) The department or office shall sell the publications mentioned in subsections (1) and (2) to purchasers at a price fixed by the department or office at not less than the cost of printing and binding such publications, plus packaging and postage costs for mailing; except that the department or office may deliver copies of such publications free of cost to state agencies and officers; insurance supervisory authorities of other states and jurisdictions; institutions of higher learning located in Florida; the Library of Congress; insurance officers of Naval, Military, and Air Force bases located in Florida; and to persons serving as advisers to the department or office in preparation of the publications.

(4) The department or office may contract with outside vendors, in accordance with chapter 287, to compile data in an electronic data processing format that is compatible with the systems of the department or office.

§624.314 FS | Publications; Insurance Regulatory Trust Fund

The department and office shall each deposit all moneys received from the sale of publications under s. 624.313 in the Insurance Regulatory Trust Fund for the purpose of paying costs for the preparation, printing, and delivery of the publications mentioned in s. 624.313(2), packaging and mailing costs, and banking, accounting, and incidental expenses connected with the sale and delivery of such publications. All moneys so deposited and all funds hereafter transferred to the Insurance Regulatory Trust Fund are appropriated for the uses and purposes above mentioned.

§624.315 FS | Annual Reports; Quarterly Reports

(1) As early as reasonably possible, the office, with such assistance from the department as requested, shall annually prepare a report to the Speaker and Minority Leader of the House of Representatives, the President and Minority Leader of the Senate, the chairs of the legislative committees with jurisdiction over matters of insurance, and the Governor showing, with respect to the preceding calendar year:

(a) Names of the authorized insurers transacting insurance in this state, with abstracts of their financial statements including assets, liabilities, and net worth.

(b) Names of insurers whose business was closed during the year, the cause thereof, and amounts of assets and liabilities as ascertainable.

(c) Names of insurers against which delinquency or similar proceedings were instituted. For property insurers for which the delinquency or similar proceedings were instituted, the annual report must also include the date that each insurer was deemed impaired of capital or surplus, as the terms impairment of capital and impairment of surplus are defined in s. 631.011, or insolvent, as the term insolvency is defined in s. 631.011; a concise statement of the circumstances that led to each insurer’s delinquency; a summary of the actions taken by the insurer and the office to avoid delinquency; and the results or status of each such proceeding.

(d) The receipts and estimated expenses of the office for the year.

(e) Such other pertinent information and matters as the office deems to be in the public interest.

(f) Annually after each regular session of the Legislature, a compilation of the laws of this state relating to insurance. Any such publication may be printed, revised, or reprinted upon the basis of the original low bid.

(g) An analysis and summary report of the state of the insurance industry in this state evaluated as of the end of the most recent calendar year.

(2) The office shall maintain the following information and make such information available upon request:

(a) Calendar year profitability, including investment income from policyholders’ unearned premium and loss reserves (Florida and countrywide).

(b) Aggregate Florida loss reserves.

(c) Premiums written (Florida and countrywide).

(d) Premiums earned (Florida and countrywide).

(e) Incurred losses (Florida and countrywide).

(f) Paid losses (Florida and countrywide).

(g) Allocated Florida loss adjustment expenses.

(h) Renewal ratio (countrywide).

(i) Variation of premiums charged by the industry as compared to rates promulgated by the Insurance Services Office (Florida and countrywide).

(j) An analysis of policy size limits (Florida and countrywide).

(k) Insureds’ selection of claims-made versus occurrence coverage (Florida and countrywide).

(l) A subreport on the involuntary market in Florida encompassing such joint underwriting plans and assigned risk plans operating in the state.

(m) A subreport providing information relevant to emerging markets and alternate marketing mechanisms, such as self-insured trusts, risk retention groups, purchasing groups, and the excess-surplus lines market.

(n) Trends; emerging trends as exemplified by the percentage change in frequency and severity of both paid and incurred claims, and pure premium (Florida and countrywide). Reports relating to the health of the homeowners’ and condominium unit owners’ insurance market must include the percentage of policies written by voluntary carriers, the percentage of policies written by the Citizens Property Insurance Corporation, and any trends related to the relative shares of the voluntary and residual markets.

(o) Fast track loss ratios as defined and assimilated by the Insurance Services Office (Florida and countrywide).

(3) The office may contract with outside vendors, in accordance with chapter 287, to compile data in an electronic data processing format that is compatible with the systems of the office.

(4)

(a) The office shall create a report detailing all actions of the office to enforce insurer compliance with this code and all rules and orders of the office or department during the previous year. For each of the following, the report must detail the insurer or other licensee or registrant against whom such action was taken; whether the office found any violation of law or rule by such party, and, if so, detail such violation; and the resolution of such action, including any penalties imposed by the office. The report must be published on the website of the office and submitted to the commission, the President of the Senate, the Speaker of the House of Representatives, and the legislative committees with jurisdiction over matters of insurance on or before January 31 of each year. The report must include, but need not be limited to:

1. The revocation, denial, or suspension of any license or registration issued by the office.

2. All actions taken pursuant to s. 624.310.

3. Fines imposed by the office for violations of this code.

4. Consent orders entered into by the office.

5. Examinations and investigations conducted and completed by the office pursuant to ss. 624.316 and 624.3161.

6. Investigations conducted and completed, by line of insurance, for which the office found violations of law or rule but did not take enforcement action.

(b) Each quarter, the office shall create a report detailing all actions of the office to enforce insurer compliance during the previous quarter. The report must include, but need not be limited to, the subjects that must be included in the annual report under paragraph (a). The report must be submitted to the commission, the President of the Senate, the Speaker of the House of Representatives, and the legislative committees with jurisdiction over matters of insurance. The report is due on or before April 30, July 31, October 31, and January 31, respectively, for the immediately preceding quarter. The report due January 31 may be included within the annual report required under paragraph (a).

(c) The office need not include within any report required under this subsection information that would violate any confidentiality provision included within any agreement, order, or consent order entered into or adopted by the office.

(5) When aggregate information includes information asserted as trade secret information, the office may include the trade secret information in the report required under subsection (1) or may make the trade secret information available under subsection (2) unless the trade secret information can be individually extrapolated, in which case the trade secret information remains protected as provided under s. 624.4213.

§624.316 FS | Examination Of Insurers

(1)

(a) The office shall examine the affairs, transactions, accounts, records, and assets of each authorized insurer and of the attorney in fact of a reciprocal insurer as to its transactions affecting the insurer as often as it deems advisable, except as provided in this section. The examination may include examination of the affairs, transactions, accounts, and records relating directly or indirectly to the insurer and of the assets of the insurer’s managing general agents and controlling or controlled person, as defined in s. 625.012. The examination shall be pursuant to a written order of the office. Such order shall expire upon receipt by the office of the written report of the examination.

(b) As a part of its examination procedure, the office shall examine each insurer regarding all of the information required by s. 627.915.

(c) The office shall examine each insurer according to accounting procedures designed to fulfill the requirements of generally accepted insurance accounting principles and practices and good internal control and in keeping with generally accepted accounting forms, accounts, records, methods, and practices relating to insurers. To facilitate uniformity in examinations, the commission may adopt, by rule, the Market Conduct Examiners Handbook and the Financial Condition Examiners Handbook of the National Association of Insurance Commissioners, 2002, and may adopt subsequent amendments thereto, if the examination methodology remains substantially consistent.

(2)

(a) Except as provided in paragraph (f), the office may examine each insurer as often as may be warranted for the protection of the policyholders and in the public interest, but must, at a minimum, examine:

1. High-risk insurers at least once every 3 years.

2. Average- and low-risk insurers at least once every 5 years.

The examination shall cover the number of fiscal years since the last examination of the insurer, except for examinations of low-risk insurers, in which case the examination need only cover at least the preceding 5 fiscal years, and shall be commenced within 12 months after the end of the most recent fiscal year being covered by the examination. The examination may cover any period of the insurer’s operations since the last previous examination. The examination may include examination of events subsequent to the end of the most recent fiscal year and the events of any prior period that affect the present financial condition of the insurer.

(b) The office shall examine each insurer applying for an initial certificate of authority to transact insurance in this state before granting the initial certificate.

(c) In lieu of making its own examination, the office may accept a full report of the last recent examination of a foreign insurer, certified to by the insurance supervisory official of another state.

(d) The examination by the office of an alien insurer shall be limited to the alien insurer’s insurance transactions and affairs in the United States, except as otherwise required by the office.

(e) The commission shall adopt rules providing that an examination under this section may be conducted by independent certified public accountants, actuaries, investment specialists, information technology specialists, and reinsurance specialists meeting criteria specified by rule. The rules shall provide:

1. That the rates charged to the insurer being examined are consistent with rates charged by other firms in a similar profession and are comparable with the rates charged for comparable examinations.

2. That the firm selected by the office to perform the examination has no conflicts of interest that might affect its ability to independently perform its responsibilities on the examination.

3. That the insurer being examined must make payment for the examination pursuant to s. 624.320(1) in accordance with the rates and terms established by the office and the firm performing the examination.

(f) An examination under this section must be conducted at least once every year with respect to a domestic insurer that has continuously held a certificate of authority for less than 3 years. The examination must cover the preceding fiscal year or the period since the last examination of the insurer. The office may limit the scope of the examination.

(3) The office shall create, and the commission shall adopt by rule, a risk-based selection methodology for scheduling examinations of insurers subject to this section. Except as otherwise specified in subsection (2), this requirement does not restrict the authority of the office to conduct examinations under this section as often as it deems advisable. Such methodology must include all of the following:

(a) Use of a risk-focused analysis to prioritize financial examinations of insurers when such reporting indicates a decline in the insurer’s financial condition.

(b) Consideration of:

1. The level of capitalization and identification of unfavorable trends;

2. Negative trends in profitability or cash flow from operations;

3. National Association of Insurance Commissioners Insurance Regulatory Information System ratio results;

4. Risk-based capital and risk-based capital trend test results;

5. The structure and complexity of the insurer;

6. Changes in the insurer’s officers or board of directors;

7. Changes in the insurer’s business strategy or operations;

8. Findings and recommendations from an examination made pursuant to this section or s. 624.3161;

9. Current or pending regulatory actions by the office or the department;

10. Information obtained from other regulatory agencies or independent organization ratings and reports; and

11. The impact of an insurer’s insolvency on policyholders of the insurer and the public generally.

(c) Prioritization of property insurers for which the office identifies significant concerns about an insurer’s solvency pursuant to s. 627.7154.

(d) Any other matters the office deems necessary to consider for the protection of the public.

(4) The office shall present any proposed rules implementing this section to the commission no later than October 1, 2023. In addition to the methodology required by this section, such rule or rules must include a plan to implement the examination schedule in subsection (2). To facilitate the development of the methodology for scheduling examinations pursuant to this section, the commission may also adopt by rule the National Association of Insurance Commissioners Financial Analysis Handbook, to the extent that the handbook is consistent with and does not negate the requirements of this section.

§624.3161 FS | Market Conduct Examinations

(1) As often as it deems necessary, the office shall examine each licensed rating organization, each advisory organization, each group, association, carrier, as defined in s. 440.02, or other organization of insurers which engages in joint underwriting or joint reinsurance, the attorney in fact of each reciprocal insurer, and each authorized insurer transacting in this state any class of insurance to which chapter 627 is applicable. The examination must be for the purpose of ascertaining compliance by the person examined with the applicable provisions of this chapter and chapters 440, 626, 627, and 635.

(2) In lieu of any such examination, the office may accept the report of a similar examination made by the insurance supervisory official of another state.

(3) The examination may be conducted by an independent professional examiner under contract to the office, in which case payment shall be made directly to the contracted examiner by the insurer examined in accordance with the rates and terms agreed to by the office and the examiner.

(4) The reasonable cost of the examination shall be paid by the person examined, and such person shall be subject, as though an insurer, to the provisions of s. 624.320.

(5) Such examinations shall also be subject to the applicable provisions of chapter 440 and ss. 624.318, 624.319, 624.321, and 624.322.

(6) Based on the findings of a market conduct examination that an insurer has exhibited a pattern or practice of willful violations of an unfair insurance trade practice related to claims handling which caused harm to policyholders, as prohibited by s. 626.9541(1)(i), the office may order an insurer pursuant to chapter 120 to file its claims-handling practices and procedures related to that line of insurance with the office for review and inspection, to be held by the office for the following 36-month period. Such claims-handling practices and procedures are public records and are not trade secrets or otherwise exempt from the provisions of s. 119.07(1). As used in this section, “claims-handling practices and procedures” are any policies, guidelines, rules, protocols, standard operating procedures, instructions, or directives that govern or guide how and the manner in which an insured’s claims for benefits under any policy will be processed.

(7) Notwithstanding subsection (1), any authorized insurer transacting residential property insurance business in this state:

(a) May be subject to an additional market conduct examination after a hurricane if, at any time more than 90 days after the end of the hurricane, the insurer is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane-related property insurance claims filed to the number of property insurance policies in force;

(b) Must be subject to a market conduct examination after a hurricane if, at any time more than 90 days after the end of the hurricane, the insurer:

1. Is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane claim-related consumer complaints made about that insurer to the department to the insurer’s total number of hurricane-related claims;

2. Is among the top 20 percent of insurers based upon a calculation of the ratio of hurricane claims closed without payment to the insurer’s total number of hurricane claims on policies providing wind or windstorm coverage;

3. Has made significant payments to its managing general agent since the hurricane; or

4. Is identified by the office as necessitating a market conduct exam for any other reason.

All relevant criteria under this section and s. 624.316 shall be applied to the market conduct examination under this subsection. Such an examination must be initiated within 18 months after the landfall of a hurricane that results in an executive order or a state of emergency issued by the Governor. The requirements of this subsection do not limit the authority of the office to conduct at any time a market conduct examination of a property insurer in the aftermath of a hurricane. This subsection does not require the office to conduct multiple market conduct examinations of the same insurer when multiple hurricanes make landfall in this state in a single calendar year. An examination of an insurer under this subsection must also include an examination of its managing general agent as if it were the insurer.

(8) The office shall create, and the commission shall adopt by rule, a selection methodology for scheduling and conducting market conduct examinations of insurers and other entities regulated by the office. This requirement does not restrict the authority of the office to conduct market conduct examinations as often as it deems necessary. Such selection methodology must prioritize market conduct examinations of insurers and other entities regulated by the office to whom any of the following conditions applies:

(a) An insurance regulator in another state has initiated or taken regulatory action against the insurer or entity regarding an act or omission of such insurer or entity which, if committed in this state, would constitute a violation of the laws of this state or any rule or order of the office or department.

(b) Given the insurer’s market share in this state, the department or the office has received a disproportionate number of the following types of claims-handling complaints against the insurer:

1. Failure to timely communicate with respect to claims;

2. Failure to timely pay claims;

3. Untimely payments giving rise to the payment of statutory interest;

4. Failure to adjust and pay claims in accordance with the terms and conditions of the policy or contract and in compliance with state law;

5. Violations of part IX of chapter 626, the Unfair Insurance Trade Practices Act;

6. Failure to use licensed and duly appointed claims adjusters;

7. Failure to maintain reasonable claims records; or

8. Failure to adhere to the company’s claims-handling manual.

(c) The results of a National Association of Insurance Commissioners Market Conduct Annual Statement indicate that the insurer is a negative outlier with regard to particular metrics.

(d) There is evidence that the insurer is violating or has violated the Unfair Insurance Trade Practices Act.

(e) The insurer meets the criteria in subsection (7).

(f) Any other conditions the office deems necessary for the protection of the public.

The office shall present the proposed rule required by this subsection to the commission no later than October 1, 2023. In addition to the methodology required by this subsection, the rule must provide criteria for how the office, in coordination with the department, will determine what constitutes a disproportionate number of claims-handling complaints described in paragraph (b).

(9) If the office concludes through an examination pursuant to this section that an insurer providing liability coverage in this state exhibits a pattern or practice of violations of the Florida Insurance Code during any investigation or examination of the insurer, the office must review the insurer’s claims-handling practices to determine if the insurer should be subject to the enhanced enforcement penalties of this subsection.

(a) A liability insurer may be subject to enhanced enforcement penalties if the office reviews the insurer’s claims-handling practices and finds a pattern or practice of the insurer failing to do the following when responding to covered liability claims under an insurance policy, after receiving actual notice of such claims:

1. Assign a licensed and appointed insurance adjuster to investigate whether coverage is provided under the policy and diligently attempt to resolve any questions concerning the extent of the insured’s coverage.

2. Evaluate the claim fairly, honestly, and with due regard for the interests of the insured based on available information.

3. Request from the insured or claimant additional relevant information the insurer reasonably deems necessary to evaluate whether to settle a claim.

4. Conduct all oral and written communications with the insured with honesty and candor.

5. Make reasonable efforts to explain to persons not represented by counsel matters requiring expertise beyond the level normally expected of a layperson with no training in insurance or claims-handling issues.

6. Retain all written and recorded communications and create and retain a summary of all verbal communications in a reasonable manner for a period of not less than 2 years after the later of the entry of a final judgment against the insured in excess of policy limits or, if an extracontractual claim is made, the conclusion of that claim and any related appeals.

7. Within 30 days after a request, provide the insured with all communications related to the insurer’s handling of the claim which are not privileged as to the insured.

8. Provide, upon request and at the insurer’s expense, reasonable accommodations necessary to communicate effectively with an insured covered under the Americans with Disabilities Act.

9. When handling a third-party claim, communicate each of the following to the insured:

a. The identity of any other person or entity the insurer has reason to believe may be liable.

b. The insurer’s final and completed estimate of the claim.

c. The possibility of an excess judgment.

d. The insured’s right to secure personal counsel at his or her own expense.

e. That the insured should cooperate with the insurer, including providing information required by the insurer because of a settlement opportunity or in accordance with the policy.

f. Any formal settlement demands or offers to settle by the claimant and any offers to settle on behalf of the insured.

10. Respond to any request for insurance information in compliance with s. 626.9372 or s. 627.4137, as applicable.

11. Seek to obtain a general release of each insured in making any settlement offer to a third-party claimant.

12. Take reasonable measures to preserve any documentary, photographic, and forensic evidence as needed for the defense of the liability claim if it appears likely that the insured’s liability exposure is greater than policy limits and the insurer fails to secure a general release in favor of the insured.

13. Comply with subsections (1) and (2), if applicable.

14. Comply with the Unfair Insurance Trade Practices Act.

(b) As used in this subsection, the term “actual notice” means the insurer’s receipt of notice of an incident or a loss that could give rise to a covered claim that is communicated to the insurer or an agent of the insurer:

1. By any manner permitted by the policy or other documents provided to the insured by the insurer;

2. Through the claims link on the insurer’s website; or

3. Through the e-mail address designated by the insurer under s. 624.422.

(c) In reviewing claims-handling practices, it is relevant whether the insured, claimant, and any representative of the insured or claimant were acting reasonably toward the insurer in furnishing information regarding the claim, in making demands of the insurer, in setting deadlines, and in attempting to settle the claim. Such matters include whether:

1. The insured cooperated with the insurer in the defense of the claim and in making settlements by taking reasonable actions requested by the claimant or required by the policy which are necessary to assist the insurer in settling a covered claim, including:

a. Executing affidavits regarding the facts within the insured’s knowledge regarding the covered loss; and

b. Providing documents, including, if reasonably necessary to settle a covered claim valued in excess of policy limits and upon the request of the claimant, a summary of the insured’s assets, liabilities, obligations, and other insurance policies that may provide coverage for the claim and the name and contact information of the insured’s employer when the insured is a natural person who was acting in the course and scope of employment when the incident giving rise to the claim occurred.

2. The claimant and any claimant’s representative:

a. Acted honestly in furnishing information regarding the claim;

b. Acted reasonably in setting deadlines; and

c. Refrained from taking actions that may be reasonably expected to prevent an insurer from accepting the settlement demand, such as providing insufficient detail within the demand, providing unreasonable deadlines for acceptance of the demand, or including unreasonable conditions to settlement.

(d) In addition to authorized penalties for a liability insurer that the office has determined has a pattern or practice of violations of the Florida Insurance Code at the conclusion of any investigation or examination, the office may impose enhanced enforcement penalties for insurer claims-handling practices that fail to meet the review standards of this subsection. Such enhanced enforcement penalties include, but are not limited to, administrative fines that are subject to a 2.0 multiplier and fines that exceed the limits on fine amounts and aggregate fine amounts provided for under this code.

(e) This subsection does not create a civil cause of action, a civil remedy under s. 624.155, or an unfair trade practice under s. 626.9541.

Notes

Former s. 627.321.

§624.317 FS | Investigation Of Agents, Adjusters, Administrators, Service Companies, And Others

If it has reason to believe that any person has violated or is violating any provision of this code, or upon the written complaint signed by any interested person indicating that any such violation may exist:

(1) The department shall conduct such investigation as it deems necessary of the accounts, records, documents, and transactions pertaining to or affecting the insurance affairs of any agent, adjuster, insurance agency, customer representative, service representative, or other person subject to its jurisdiction, subject to the requirements of s. 626.601.

(2) The office shall conduct such investigation as it deems necessary of the accounts, records, documents, and transactions pertaining to or affecting the insurance affairs of any:

(a) Administrator, service company, or other person subject to its jurisdiction.

(b) Person having a contract or power of attorney under which she or he enjoys in fact the exclusive or dominant right to manage or control an insurer.

(c) Person engaged in or proposing to be engaged in the promotion or formation of:

1. A domestic insurer;

2. An insurance holding corporation; or

3. A corporation to finance a domestic insurer or in the production of the domestic insurer’s business.

§624.318 FS | Conduct Of Examination Or Investigation; Access To Records; Correction Of Accounts; Appraisals

(1) The examination or investigation may be conducted by the accredited examiners or investigators of the department or office at the offices wherever located of the person being examined or investigated and at such other places as may be required for determination of matters under examination or investigation. In the case of alien insurers, the examination may be so conducted in the insurer’s offices and places in the United States, except as otherwise required by the department or office.

(2) Every person being examined or investigated, and its officers, attorneys, employees, agents, and representatives, shall make freely available to the department or office or its examiners or investigators the accounts, records, documents, files, information, assets, and matters in their possession or control relating to the subject of the examination or investigation. An agent who provides other products or services or maintains customer information not related to insurance must maintain records relating to insurance products and transactions separately if necessary to give the department or office access to such records. If records relating to the insurance transactions are maintained by an agent on premises owned or operated by a third party, the agent and the third party must provide access to the records by the department or office.

(3) If the department or office finds any accounts or records to be inadequate, or inadequately kept or posted, it may employ experts to reconstruct, rewrite, post, or balance them at the expense of the person being examined if such person has failed to maintain, complete, or correct such records or accounting after the department or office has given her or him notice and a reasonable opportunity to do so.

(4) If the office deems it necessary to value any asset involved in such an examination of an insurer, it may make written request of the insurer to designate one or more competent appraisers acceptable to the office, who shall promptly make an appraisal of the asset and furnish a copy thereof to the office. If the insurer fails to designate such an appraiser or appraisers within 20 days after the request of the office, the office may designate the appraiser or appraisers. The reasonable expense of any such appraisal shall be a part of the expense of examination, to be borne by the insurer.

(5) The department, the office, or an examiner may not remove any original record, account, document, file, or other property of the person being examined from the offices of such person except with the written consent of such person given in advance of such removal or pursuant to an order of court duly obtained.

(6) Any individual who willfully obstructs the department, the office, or the examiner in the examinations or investigations authorized by this part is guilty of a misdemeanor and upon conviction shall be punished as provided in s. 624.15.

(7)

(a) The department or office or its examiners or investigators may electronically scan accounts, records, documents, files, and information, relating to the subject of the examination or investigation, in the possession or control of the person being examined or investigated.

(b) The provisions of this subsection are applicable to all investigations and examinations authorized by any provision of the Florida Insurance Code.

§624.319 FS | Examination And Investigation Reports

(1) The department or office or its examiner shall make a full and true written report of each examination. The examination report shall contain only information obtained from examination of the records, accounts, files, and documents of or relative to the insurer examined or from testimony of individuals under oath, together with relevant conclusions and recommendations of the examiner based thereon. The department or office must furnish a copy of the examination report to the insurer examined at least 30 days before filing the examination report in its office. If such insurer so requests in writing within such 30-day period, the department or office must grant a hearing with respect to the examination report and may not file the examination report until after the hearing and after such modifications have been made therein as the department or office deems proper.

(2) The examination report so filed is admissible in evidence in any action or proceeding brought by the department or office against the person examined, or against its officers, employees, or agents. In all other proceedings, the admissibility of the examination report is governed by the evidence code. The department or office or its examiners may testify and offer other proper evidence as to information secured or matters discovered during the course of an examination, regardless of whether a written report of the examination has been made, furnished, or filed in the department or office. The production of documents during the course of an examination or investigation does not constitute a waiver of the attorney-client or work-product privilege.

(3)

(a)

1. Examination reports, until filed, are confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution.

2. Investigation reports are confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution until the investigation is completed or ceases to be active.

3. For purposes of this subsection, an investigation is active while it is being conducted by the department or office with a reasonable, good faith belief that it could lead to the filing of administrative, civil, or criminal proceedings. An investigation does not cease to be active if the department or office is proceeding with reasonable dispatch and has a good faith belief that action could be initiated by the department or office or other administrative or law enforcement agency. After an investigation is completed or ceases to be active, portions of the investigation report relating to the investigation remain confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution if disclosure would:

a. Jeopardize the integrity of another active investigation;

b. Impair the safety and financial soundness of the licensee or affiliated party;

c. Reveal personal financial information;

d. Reveal the identity of a confidential source;

e. Defame or cause unwarranted damage to the good name or reputation of an individual or jeopardize the safety of an individual; or

f. Reveal investigative techniques or procedures.

(b)

1. For purposes of this paragraph, “work papers” means the records of the procedures followed, the tests performed, the information obtained and the conclusions reached in an examination or investigation performed under this section or ss. 624.316, 624.3161, 624.317, 624.318, and 626.8828. Work papers include planning documentation, work programs, analyses, memoranda, letters of confirmation and representation, abstracts of company documents, and schedules or commentaries prepared or obtained in the course of such examination or investigation.

2.

a. Work papers held by the department or office are confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution until the examination report is filed or until the investigation is completed or ceases to be active.

b. Information received from another governmental entity or the National Association of Insurance Commissioners, which is confidential or exempt when held by that entity, for use by the department or office in the performance of its examination or investigation duties pursuant to this section or ss. 624.316, 624.3161, 624.317, 624.318, and 626.8828 is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution.

c. This exemption applies to work papers and such information held by the department or office before, on, or after the effective date of this exemption.

3. Confidential and exempt work papers and information may be disclosed to:

a. Another governmental entity, if disclosure is necessary for the receiving entity to perform its duties and responsibilities; and

b. The National Association of Insurance Commissioners.

4. After an examination report is filed or an investigation is completed or ceases to be active, portions of work papers may remain confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution if disclosure would:

a. Jeopardize the integrity of another active examination or investigation;

b. Impair the safety or financial soundness of the licensee, affiliated party, or insured;

c. Reveal personal financial, medical, or health information;

d. Reveal the identity of a confidential source;

e. Defame or cause unwarranted damage to the good name or reputation of an individual or jeopardize the safety of an individual;

f. Reveal examination techniques or procedures; or

g. Reveal information that is confidential or exempt under sub-subparagraph 2.b.

(c) Lists of insurers or regulated companies are confidential and exempt from s. 119.07(1) if:

1. The financial solvency, condition, or soundness of such insurers or regulated companies is being monitored by the office;

2. The list is prepared to internally coordinate regulation by the office of the financial solvency, condition, or soundness of the insurers or regulated companies; and

3. The office determines that public inspection of such list could impair the financial solvency, condition, or soundness of such insurers or regulated companies.

(4) After the examination report has been filed pursuant to subsection (1), the department or office may publish the results of any such examination in one or more newspapers published in this state whenever it deems it to be in the public interest.

(5) After the examination report of an insurer has been filed pursuant to subsection (1), an affidavit must be filed with the office, within 30 days after the report has been filed, on a form furnished by the office and signed by the officer of the company in charge of the insurer’s business in this state, stating that she or he has read the report and that the recommendations made in the report will be considered within a reasonable time.

(6) This section is subject to the Open Government Sunset Review Act in accordance with s. 119.15 and shall stand repealed on October 2, 2028, unless reviewed and saved from repeal through reenactment by the Legislature.

§624.320 FS | Examination Expenses

(1) Each insurer so examined shall pay to the office the expenses of the examination at the rates adopted by the office. Such expenses shall include actual travel expenses, reasonable living expense allowance, compensation of the examiner or other person making the examination, and necessary attendant administrative costs of the office directly related to the examination. Such travel expense and living expense allowance shall be limited to those expenses necessarily incurred on account of the examination and shall be paid by the examined insurer together with compensation upon presentation by the office to such insurer of a detailed account of such charges and expenses after a detailed statement has been filed by the examiner and approved by the office.

(2) All moneys collected from insurers for examinations shall be deposited into the Insurance Regulatory Trust Fund, and the office may make deposits from time to time into such fund from moneys appropriated for the operation of the office.

(3) Notwithstanding the provisions of s. 112.061, the office may pay to the examiner or person making the examination out of such trust fund the actual travel expenses, reasonable living expense allowance, and compensation in accordance with the statement filed with the office by the examiner or other person, as provided in subsection (1) upon approval by the office.

(4) When not examining an insurer, the travel expenses, per diem, and compensation for the examiners and other persons employed to make examinations, if approved, shall be paid out of moneys budgeted for such purpose as regular employees, reimbursements for such travel expenses and per diem to be at rates no more than as provided in s. 112.061.

(5) The office may pay to regular insurance examiners, not residents of Leon County, Florida, per diem for periods not exceeding 30 days for each such examiner while at the Office of Insurance Regulation in Tallahassee, Florida, for the purpose of auditing insurers’ annual statements. Such expenses shall be paid out of moneys budgeted for such purpose, as for regular employees at rates provided in s. 112.061.

(6) The provisions of this section shall apply to rate analysts and rate examiners in the discharge of their duties under s. 624.3161.

§624.321 FS | Witnesses And Evidence

(1) As to any examination, investigation, or hearing being conducted under this code, a person designated by the department or office, respectively:

(a) May administer oaths, examine and cross-examine witnesses, receive oral and documentary evidence; and

(b) Shall have the power to subpoena witnesses, compel their attendance and testimony, and require by subpoena the production of books, papers, records, files, correspondence, documents, or other evidence which is relevant to the inquiry.

(2) If any person refuses to comply with any such subpoena or to testify as to any matter concerning which she or he may be lawfully interrogated, the Circuit Court of Leon County or of the county wherein such examination, investigation, or hearing is being conducted, or of the county wherein such person resides, may, on the application of the department or office, issue an order requiring such person to comply with the subpoena and to testify.

(3) Subpoenas shall be served, and proof of such service made, in the same manner as if issued by a circuit court. Witness fees, cost, and reasonable travel expenses, if claimed, shall be allowed the same as for testimony in a circuit court.

§624.322 FS | Testimony Compelled; Immunity From Prosecution

(1) If any natural person asks to be excused from attending or testifying or from producing any books, papers, records, contracts, documents, or other evidence in connection with any examination, hearing, or investigation being conducted by the department, commission, or office or its examiner, on the ground that the testimony or evidence required of her or him may tend to incriminate the person or subject her or him to a penalty or forfeiture, and shall notwithstanding be directed to give such testimony or produce such evidence, the person must, if so directed by the department, commission, or office and the Department of Legal Affairs, nonetheless comply with such direction; but she or he shall not thereafter be prosecuted or subjected to any penalty or forfeiture for or on account of any transaction, matter, or thing concerning which she or he may have so testified or produced evidence; and no testimony so given or evidence produced shall be received against the person upon any criminal action, investigation, or proceeding. However, no such person so testifying shall be exempt from prosecution or punishment for any perjury committed by her or him in such testimony, and the testimony or evidence so given or produced shall be admissible against her or him upon any criminal action, investigation, or proceeding concerning such perjury. No license or permit conferred or to be conferred to such person shall be refused, suspended, or revoked based upon the use of such testimony.

(2) Any such individual may execute, acknowledge, and file with the department, commission, or office, as appropriate, a statement expressly waiving such immunity or privilege in respect to any transaction, matter, or thing specified in such statement; and thereupon the testimony of such individual or such evidence in relation to such transaction, matter, or thing may be received or produced before any judge or justice, court, tribunal, grand jury, or otherwise; and, if so received or produced, such individual shall not be entitled to any immunity or privileges on account of any testimony she or he may so give or evidence so produced.

§624.324 FS | Hearings

The department, commission, and office may each hold hearings for any purpose within the scope of this code deemed to be necessary.

§624.33 FS | Jurisdiction Regarding Health Or Life Coverage

(1) Notwithstanding any other provision of law, and except as provided in this section, any person or other entity which in this state provides life insurance coverage; annuities; or coverage for medical, surgical, chiropractic, physical therapy, speech-language pathology, audiology, professional mental health, dental, hospital, or optometric expenses, or any other health insurance coverage, whether such coverage is by direct payment, reimbursement, or otherwise, shall, upon request, file with the office a copy of Internal Revenue Service form 5500 and attached schedules as filed with the Internal Revenue Service and the United States Department of Labor, and an annual summary, as required by the Employee Retirement Income Security Act of 1974, 29 U.S.C. ss. 1001 et seq., as amended.

(2) Any person or entity providing any of the coverages or benefits referred to in subsection (1) which does not meet the filing requirements referred to in subsection (1), or which otherwise fails to demonstrate to the office that, while providing such services, it is exempt from state law, shall submit to an examination by the office to determine the organization and solvency of the person or entity and to determine whether or not such entity is in compliance with the applicable provisions of chapters 624-651.

(3) A governmental trust which is established or maintained entirely by the state, counties, municipalities, or special taxing districts or any agency or instrumentality thereof or any combination thereof exclusively for the benefit of their employees is exempt from the terms of this section.

(4) Any licensed agent, administrator, service company, or other person which, in connection with coverage offered by an entity subject to examination by the office in accordance with subsection (2), is engaged in this state in the solicitation, negotiation, or effectuation of any such coverage or the inspection of risks or the setting of rates, the investigation or adjustment of losses, the collection of premiums, or any other function connected with any such coverage is subject to the jurisdiction of the department or office and to such examination as the department or office deems necessary of the accounts, records, documents, and transactions pertaining to or affecting such coverage to the same extent as the person or entity affording such coverage.

(5) This section does not apply to an insurer, health maintenance organization, professional service plan corporation, or person providing continuing care, which person or entity possesses a valid certificate of authority issued by the office, except to the extent that such person or entity provides the coverages described in subsection (1) to its employees other than under a policy or contract which is otherwise subject to regulation under the Florida Insurance Code.

§624.34 FS | Authority Of Department Of Law Enforcement To Accept Fingerprints Of, And Exchange Criminal History Records With Respect To, Certain Persons

(1) The Department of Law Enforcement may accept fingerprints of organizers, incorporators, subscribers, officers, stockholders, directors, or any other persons involved, directly or indirectly, in the organization, operation, or management of:

(a) Any insurer or proposed insurer transacting or proposing to transact insurance in this state.

(b) Any other entity which is examined or investigated or which is eligible to be examined or investigated under the provisions of the Florida Insurance Code.

(2) The Department of Law Enforcement may accept fingerprints of individuals who apply for a license as an agent, customer representative, adjuster, service representative, or navigator or the fingerprints of the majority owner, sole proprietor, partners, officers, and directors of a corporation or other legal entity that applies for licensure with the department or office under the Florida Insurance Code.

(3) The Department of Law Enforcement may, to the extent provided for by federal law, exchange state, multistate, and federal criminal history records with the department or office for the purpose of the issuance, denial, suspension, or revocation of a certificate of authority, certification, or license to operate in this state.

(4) The Department of Law Enforcement may accept fingerprints of any other person required by statute or rule to submit fingerprints to the department or office or any applicant or licensee regulated by the department or office who is required to demonstrate that he or she has not been convicted of or pled guilty or nolo contendere to a felony or a misdemeanor.

(5) The Department of Law Enforcement shall, upon receipt of fingerprints from the department or office, submit the fingerprints to the Federal Bureau of Investigation to check federal criminal history records.

(6) Statewide criminal records obtained through the Department of Law Enforcement, federal criminal records obtained through the Federal Bureau of Investigation, and local criminal records obtained through local law enforcement agencies shall be used by the department and office for the purpose of issuance, denial, suspension, or revocation of certificates of authority, certifications, or licenses issued to operate in this state.

§624.36 FS | Availability Of Description Of Specified Behavioral Health Care Benefits On Department Website

The department shall make available on its website a description of behavioral health care benefits required to be made available pursuant to s. 627.668 and federal law for individual and group policies and contracts.

Chapter 624 Part III FS
AUTHORIZATION OF INSURERS AND GENERAL REQUIREMENTS

§624.401 FS | Certificate of Authority Required

(1) No person shall act as an insurer, and no insurer or its agents, attorneys, subscribers, or representatives shall directly or indirectly transact insurance, in this state except as authorized by a subsisting certificate of authority issued to the insurer by the office, except as to such transactions as are expressly otherwise provided for in this code.

(2) No insurer shall from offices or by personnel or facilities located in this state solicit insurance applications or otherwise transact insurance in another state or country unless it holds a subsisting certificate of authority issued to it by the office authorizing it to transact the same kind or kinds of insurance in this state.

(3) This state hereby preempts the field of regulating insurers and their agents and representatives; and no county, city, municipality, district, school district, or political subdivision shall require of any insurer, agent, or representative regulated under this code any authorization, permit, or registration of any kind for conducting transactions lawful under the authority granted by the state under this code.

(4)

(a) Any person who acts as an insurer, transacts insurance, or otherwise engages in insurance activities in this state without a certificate of authority in violation of this section commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

(b) However, any person acting as an insurer without a valid certificate of authority who violates this section commits insurance fraud, punishable as provided in this paragraph. If the amount of any insurance premium collected with respect to any violation of this section:

1. Is less than $20,000, the offender commits a felony of the third degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, and the offender shall be sentenced to a minimum term of imprisonment of 1 year.

2. Is $20,000 or more, but less than $100,000, the offender commits a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, and the offender shall be sentenced to a minimum term of imprisonment of 18 months.

3. Is $100,000 or more, the offender commits a felony of the first degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084, and the offender shall be sentenced to a minimum term of imprisonment of 2 years.

§624.402 FS | Exceptions, Certificate of Authority Required

A certificate of authority shall not be required of an insurer with respect to:

(1) Investigation, settlement, or litigation of claims under its policies lawfully written in this state, or liquidation of assets and liabilities of the insurer (other than collection of new premiums), all as resulting from its former authorized operations in this state.

(2) Transactions involving a policy, subsequent to issuance thereof, covering only subjects of insurance not resident, located, or expressly to be performed in this state at the time of issuance, and lawfully solicited, written, or delivered outside this state.

(3) Transactions pursuant to surplus lines coverages lawfully written under part VIII of chapter 626.

(4) Reinsurance, when transacted as authorized under s. 624.610.

(5) Continuation and servicing of life insurance or health insurance policies or annuity contracts remaining in force as to residents of this state when the insurer has withdrawn from the state and is not transacting new insurance therein.

(6) Investment by a foreign insurer of its funds in real estate in this state or in securities secured thereby, if the foreign insurer complies with the laws of this state relating generally to foreign business corporations.

(7) Transactions involving hospital professional, hospital liability, and hospital general liability insurance issued to a resident of this state by a captive insurance company, provided:

(a) The captive insurance company is domiciled in a United States jurisdiction, the insurance regulatory body of which has been accredited by the National Association of Insurance Commissioners;

(b) The insured owns or controls, or holds with the power to vote, a percentage of the voting securities of such captive insurance company which is equal to or greater than the greatest percentage of voting securities owned or controlled by any other person;

(c) The captive insurance company files an insurance premium tax return in this state and pays the tax on such insurance premiums imposed by s. 624.509(1) or s. 624.5091, whichever is greater;

(d) The captive insurance company has insured no more than three hospitals in Florida;

(e) The captive insurance company has been in existence for at least 3 years as of July 1, 1992; and

(f) The captive insurance company maintains a surplus of at least $1.5 million in accordance with the laws of its state of domicile.

(8)

(a) An insurer domiciled outside the United States covering only persons who, at the time of issuance or renewal, are nonresidents of the United States if:

1. The insurer does not solicit, sell, or accept application for any insurance policy or contract to be delivered or issued for delivery to any person in any state;

2. The insurer registers with the office via a letter of notification upon commencing business from this state;

3. The insurer provides the following information, in English, to the office annually by March 1:

a. The name of the insurer; the country of domicile; the address of the insurer’s principal office and office in this state; the names of the owners of the insurer and their percentage of ownership; the names of the officers and directors of the insurer; the name, e-mail, and telephone number of a contact person for the insurer; and the number of individuals who are employed by the insurer or its affiliates in this state;

b. The lines of insurance and types of products offered by the insurer;

c. A statement from the applicable regulatory body of the insurer’s domicile certifying that the insurer is licensed or registered for those lines of insurance and types of products in that domicile; and

d. A copy of the filings required by the applicable regulatory body of the insurer’s country of domicile in that country’s official language or in English, if available;

4. All certificates, policies, or contracts issued in this state showing coverage under the insurer’s policy include the following statement in a contrasting color and at least 10-point type: “The policy providing your coverage and the insurer providing this policy have not been approved by the Florida Office of Insurance Regulation”; and

5. If the insurer ceases to do business from this state, the insurer will provide written notification to the office within 30 days after cessation.

(b) For purposes of this subsection, “nonresident” means a trust or other entity organized and domiciled under the laws of a country other than the United States or a person who resides in and maintains a physical place of domicile in a country other than the United States, which he or she recognizes as and intends to maintain as his or her permanent home. A nonresident does not include an unauthorized immigrant present in the United States. Notwithstanding any other provision of law, it is conclusively presumed, for purposes of this subsection, that a person is a resident of the United States if such person has:

1. Had his or her principal place of domicile in the United States for 180 days or more in the 365 days prior to issuance or renewal of the policy;

2. Registered to vote in any state;

3. Made a statement of domicile in any state; or

4. Filed for homestead tax exemption on property in any state.

(c) Subject to the limitations provided in this subsection, services, including those listed in the definition of the term “transact” in s. 624.10, may be provided by the insurer or an affiliated person as defined in s. 624.04 under common ownership or control with the insurer.

(d) An alien insurer transacting insurance in this state without complying with this subsection shall be in violation of this chapter and subject to the penalties provided in s. 624.15.

(9)

(a) Life insurance policies or annuity contracts may be solicited, sold, or issued in this state by an insurer domiciled outside the United States, covering only persons who, at the time of issuance are nonresidents of the United States, provided that:

1. The insurer is currently an authorized insurer in his or her country of domicile as to the kind or kinds of insurance proposed to be offered and must have been such an insurer for not fewer than the immediately preceding 3 years, or must be the wholly owned subsidiary of such authorized insurer or must be the wholly owned subsidiary of an already eligible authorized insurer as to the kind or kinds of insurance proposed for a period of not fewer than the immediately preceding 3 years. However, the office may waive the 3-year requirement if the insurer has operated successfully for a period of at least the immediately preceding year and has capital and surplus of not less than $25 million.

2. Before the office may grant eligibility, the requesting insurer furnishes the office with a duly authenticated copy of its current annual financial statement, in English, and with all monetary values therein expressed in United States dollars, at an exchange rate then-current and shown in the statement, in the case of statements originally made in the currencies of other countries, and with such additional information relative to the insurer as the office may request.

3. The insurer has and maintains surplus as to policyholders of not less than $15 million. Any such surplus as to policyholders shall be represented by investments consisting of eligible investments for like funds of like domestic insurers under part II of chapter 625; however, any such surplus as to policyholders may be represented by investments permitted by the domestic regulator of such alien insurance company if such investments are substantially similar in terms of quality, liquidity, and security to eligible investments for like funds of like domestic insurers under part II of chapter 625.

4. The insurer has a good reputation as to providing service to its policyholders and the payment of losses and claims.

5. To maintain eligibility, the insurer furnishes the office within the time period specified in s. 624.424(1), a duly authenticated copy of its current annual and quarterly financial statements, in English, and with all monetary values therein expressed in United States dollars, at an exchange rate then-current and shown in the statement, in the case of statements originally made in the currencies of other countries, and with such additional information relative to the insurer as the office may request.

6. An insurer receiving eligibility under this subsection agrees to make its books and records pertaining to its operations in this state available for inspection during normal business hours upon request of the office.

7. The insurer notifies the applicant in clear and conspicuous language:

a. The date of organization of the insurer.

b. The identity of and rating assigned by each recognized insurance company rating organization that has rated the insurer or, if applicable, that the insurer is unrated.

c. That the insurer does not hold a certificate of authority issued in this state and that the office does not exercise regulatory oversight over the insurer.

d. The identity and address of the regulatory authority exercising oversight of the insurer. This paragraph does not impose upon the office any duty or responsibility to determine the actual financial condition or claims practices of any unauthorized insurer, and the status of eligibility, if granted by the office, indicates only that the insurer appears to be financially sound and to have satisfactory claims practices and that the office has no credible evidence to the contrary.

(b) If the office has reason to believe that an insurer issuing policies or contracts pursuant to this subsection is insolvent or is in unsound financial condition, does not make reasonable prompt payment of benefits, or is no longer eligible under the conditions specified in this subsection, the office may conduct an examination or investigation in accordance with s. 624.316, s. 624.3161, or s. 624.320 and, if the findings of the examination or investigation warrant, may withdraw the eligibility of the insurer to issue policies or contracts pursuant to this subsection without having a certificate of authority issued by the office.

(c) This subsection does not provide an exception to the agent licensure requirements of chapter 626. A insurer issuing policies or contracts pursuant to this subsection shall appoint the agents that the insurer uses to sell such policies or contracts as provided in chapter 626.

(d) An insurer issuing policies or contracts pursuant to this subsection is subject to part IX of chapter 626, the Unfair Insurance Trade Practices Act, and the office may take such actions against the insurer for a violation as are provided in that part.

(e) Policies and contracts issued pursuant to this subsection are not subject to the premium tax specified in s. 624.509.

(f) Applications for life insurance coverage offered under this subsection must contain, in contrasting color and not less than 12-point type, the following statement on the same page as the applicant’s signature:

This policy is primarily governed by the laws of a foreign country. As a result, all of the rating and underwriting laws applicable to policies filed in this state do not apply to this coverage, which may result in your premiums being higher than would be permissible under a Florida-approved policy. A purchase of individual life insurance should be considered carefully, as future medical conditions may make it impossible to qualify for another individual life policy. If the insurer issuing your policy becomes insolvent, this policy is not covered by the Florida Life and Health Insurance Guaranty Association. For information concerning individual life coverage under a Florida-approved policy, consult your agent or the Florida Department of Financial Services.

(g) All life insurance policies and annuity contracts issued pursuant to this subsection must contain on the first page of the policy or contract, in contrasting color and not less than 10-point type, the following statement:

The benefits of the policy providing your coverage are governed primarily by the law of a country other than the United States.

(h) All single-premium life insurance policies and single-premium annuity contracts issued to persons who are not residents of the United States and are not nonresidents illegally residing in the United States pursuant to this subsection are subject to chapter 896.

(i) For purposes of this subsection, the term “nonresident” means a trust or other entity or person as defined in subsection (8).

(j) An alien insurer transacting insurance in this state without complying with this subsection is in violation of this chapter and subject to the penalties provided in s. 624.15, and must also pay the fine required for each violation as prescribed by s. 626.910.

§624.4031 FS | Church Benefit Plans and Church Benefit Board

(1) For purposes of this section, “church benefits board” means an organization as described in s. 414(e)(3)(A) of the Internal Revenue Code of 1986, as amended, that:

(a) Has the principal purpose or function of administering or funding a plan or program for providing retirement benefits or welfare benefits for the ministers or employees of a church or a conference, convention, or association of churches.

(b) Is controlled by or affiliated with a church or a conference, convention, or association of churches.

(2) If authorized by its members or as otherwise provided by law, a domestic or foreign nonprofit corporation formed for a religious purpose may provide, directly or through a separate church benefits board, for the support and payment of pensions and benefits to its ministers, teachers, employees, trustees, directors, or other functionaries and to the ministers, teachers, employees, trustees, directors, or functionaries of organizations controlled by or affiliated with a church or a conference, convention, or association of churches under its jurisdiction and control and may provide for the payment of pensions and benefits to the spouse, children, dependents, or other beneficiaries of such persons.

(3) A church benefits board may provide for the collection of contributions and other payments to aid in providing pensions and benefits under this act and for the creation, maintenance, investment, management, and disbursement of necessary annuities, endowments, reserves, and other funds for such purposes. Payments may be received from a trust fund or corporation that funds a “church plan” as defined by s. 414(e) of the Internal Revenue Code of 1986, as amended.

(4) A church benefits board may provide certificates or agreements of participation and debentures and indemnification agreements to its program participants as appropriate to accomplish its purposes, may act as trustee under a lawful trust committed to it by contract, will, or otherwise, and may act as agent for the performance of a lawful act relating to the purposes of the trust.

(5) A church benefits board, directly or through an affiliate wholly owned by the board, may agree to indemnify against damage or risk of loss:

(a) Its affiliated ministers, teachers, employees, trustees, functionaries, and directors and their families, dependents, and beneficiaries.

(b) A church, or a convention, conference, or association of churches, or an organization that is controlled by or affiliated with a church or a convention, conference, or association of churches.

(6) Money or other benefits that have been or will be provided to a participant or a beneficiary under a plan or program of retirement income, relief, welfare, or employee benefit provided by or through a church benefits board is not subject to execution, attachment, garnishment, or other process and may not be seized, taken, appropriated, or applied as part of a judicial, legal, or equitable process or operation of a law other than a constitution to pay a debt or liability of the participant or beneficiary. This section does not apply to a qualified domestic relations order or an amount required by the church benefits board to recover costs or expenses it incurred in the plan or program.

(7) If a plan or program under this act contains a provision prohibiting assignment or other transfer by a beneficiary of money or benefits to be paid or rendered or of other rights under the plan or program without the written consent of the church benefits board, a prohibited assignment or transfer or an attempt to make a prohibited assignment or transfer is void if made without that consent.

(8) The Florida Insurance Code does not apply to a church benefits board that has operated more than 5 years in its state of domicile and has more than $2 million in reserves. This exemption extends to the programs, plans, benefits, activities, or affiliates of the church benefits board. A church benefits board may qualify for this exemption if an authorized representative of the church benefits board submits to the office an affidavit stating that the church benefits board meets or exceeds the requirements of this section. If the office believes the information provided on the affidavit is inaccurate, the office has the burden of proving that the church benefits board fails to meet the requirements of this section.

(9) Church benefits boards may not issue life insurance policies.

§624.404 FS | General Eligibility of Insurers for Certificate of Authority

To qualify for and hold authority to transact insurance in this state, an insurer must be otherwise in compliance with this code and with its charter powers and must be an incorporated stock insurer, an incorporated mutual insurer, or a reciprocal insurer, of the same general type as may be formed as a domestic insurer under this code; except that:

(1) No insurer shall be authorized to transact insurance in this state which does not maintain reserves as required by part I of chapter 625 applicable to the kind or kinds of insurance transacted by such insurer, wherever transacted in the United States, or which transacts insurance in the United States on the assessment premium plan, stipulated premium plan, cooperative plan, or any similar plan.

(2) A foreign or alien insurer or exchange may not be authorized to transact insurance in this state unless it is otherwise qualified therefor under this code and has operated satisfactorily for at least 3 years in its state or country of domicile; however, the office may waive the 3-year requirement if the foreign or alien insurer or exchange:

(a) Has operated successfully and has capital and surplus of $5 million;

(b) Is the wholly owned subsidiary of an insurer which is an authorized insurer in this state;

(c) Is the successor in interest through merger or consolidation of an authorized insurer;

(d) Provides a product or service not readily available to the consumers of this state; or

(e) Possesses sufficient capital and surplus to support its plan of operation as filed with the office.

(3)

(a) The office shall not grant or continue authority to transact insurance in this state as to any insurer the management, officers, or directors of which are found by it to be incompetent or untrustworthy; or so lacking in insurance company managerial experience as to make the proposed operation hazardous to the insurance-buying public; or so lacking in insurance experience, ability, and standing as to jeopardize the reasonable promise of successful operation; or which it has good reason to believe are affiliated directly or indirectly through ownership, control, reinsurance transactions, or other insurance or business relations, with any person or persons whose business operations are or have been marked, to the detriment of policyholders or stockholders or investors or creditors or of the public, by manipulation of assets, accounts, or reinsurance or by bad faith.

(b) The office shall not grant or continue authority to transact insurance in this state as to any insurer if any person, including any subscriber, stockholder, or incorporator, who exercises or has the ability to exercise effective control of the insurer, or who influences or has the ability to influence the transaction of the business of the insurer, does not possess the financial standing and business experience for the successful operation of the insurer.

(c) The office may deny, suspend, or revoke the authority to transact insurance in this state of any insurer if any person, including any subscriber, stockholder, or incorporator, who exercises or has the ability to exercise effective control of the insurer, or who influences or has the ability to influence the transaction of the business of the insurer, has been found guilty of, or has pleaded guilty or nolo contendere to, any felony or crime punishable by imprisonment of 1 year or more under the law of the United States or any state thereof or under the law of any other country which involves moral turpitude, without regard to whether a judgment of conviction has been entered by the court having jurisdiction in such case. However, in the case of an insurer operating under a subsisting certificate of authority, the insurer shall remove any such person immediately upon discovery of the conditions set forth in this paragraph when applicable to such person or upon the order of the office, and the failure to so act by said insurer shall be grounds for revocation or suspension of the insurer’s certificate of authority.

(d) The office may deny, suspend, or revoke the authority of an insurer to transact insurance in this state if any person, including any subscriber, stockholder, or incorporator, who exercises or has the ability to exercise effective control of the insurer, or who influences or has the ability to influence the transaction of the business of the insurer, which person the office has good reason to believe is now or was in the past affiliated directly or indirectly, through ownership interest of 10 percent or more, control, or reinsurance transactions, with any business, corporation, or other entity that has been found guilty of or has pleaded guilty or nolo contendere to any felony or crime punishable by imprisonment for 1 year or more under the laws of the United States, any state, or any other country, regardless of adjudication. However, in the case of an insurer operating under a subsisting certificate of authority, the insurer shall immediately remove such person or immediately notify the office of such person upon discovery of the conditions set forth in this paragraph, either when applicable to such person or upon order of the office; the failure to remove such person, provide such notice, or comply with such order constitutes grounds for suspension or revocation of the insurer’s certificate of authority.

(4)

(a) No authorized insurer shall act as a fronting company for any unauthorized insurer which is not an approved reinsurer.

(b) A “fronting company” is an authorized insurer which by reinsurance or otherwise generally transfers more than 50 percent to one unauthorized insurer which does not meet the requirements of s. 624.610(3)(a), (b), or (c), or more than 75 percent to two or more unauthorized insurers which do not meet the requirements of s. 624.610(3)(a), (b), or (c), of the entire risk of loss on all of the insurance written by it in this state, or on one or more lines of insurance, on all of the business produced through one or more agents or agencies, or on all of the business from a designated geographical territory, without obtaining the prior approval of the office.

(c) The office may, in its discretion, approve a transfer of risk in excess of the limits in paragraph (b) upon presentation of evidence, satisfactory to the office, that the transfer would be in the best interests of the financial condition of the insurer and in the best interests of the policyholders.

(5) No insurer shall be authorized to transact insurance in this state which, during the 3 years immediately preceding its application for a certificate of authority, has violated any of the insurance laws of this state and after being informed of such violation has failed to correct the same; except that, if all other requirements are met, the office may nevertheless issue a certificate of authority to such an insurer upon the filing by the insurer of a sworn statement of all such insurance so written in violation of law, and upon payment to the office of a sum of money as additional filing fee equivalent to all premium taxes and other state taxes and fees as would have been payable by the insurer if such insurance had been lawfully written by an authorized insurer under the laws of this state. This fee, when collected, shall be deposited to the credit of the Insurance Regulatory Trust Fund.

(6) Nothing in this code shall be deemed to prohibit the granting and continuance of a certificate of authority to a domestic title insurer organized as a business trust, if the declaration of trust of such insurer was filed in the office of the Secretary of State prior to January 1, 1959, and if the insurer otherwise meets the applicable requirements of this code. Such an insurer may hereinafter in this code be referred to as a “business trust insurer.”

(7) For the purpose of satisfying the requirements of ss. 624.407 and 624.408, the investment portfolio of an insurer applying for an initial certificate of authority to do business in this state shall value its bonds and stocks in accordance with the provisions of the latest edition of the publication “Purposes and Procedures Manual of the NAIC Securities Valuation Office” by the National Association of Insurance Commissioners, July 1, 2002, and subsequent amendments thereto, if the valuation methodology remains substantially unchanged.

§624.4055 FS | Restrictions on Existing Private Passenger Automobile Insurance

No insurer writing private passenger automobile insurance in this state may continue to write such insurance if the insurer writes homeowners’ insurance in another state but not in this state, unless the insurer writing private passenger automobile insurance in this state is affiliated with an insurer writing homeowners’ insurance in this state.

§624.406 FS | Combinations of Insuring Powers, One Insurer

An insurer which otherwise qualifies therefor may be authorized to transact any one kind or combination of kinds of insurance as defined in part V except:

(1) A life insurer may also grant annuities, but shall not be authorized to transact any other kind of insurance except health insurance, disability income insurance, paid family leave insurance, excess coverage for health maintenance organizations, or excess insurance, specific and aggregate, for self-insurers of a plan of health insurance and multiple-employer welfare arrangements.

(2) A reciprocal insurer shall not transact life insurance.

(3) Except as to domestic business trust title insurers as referred to in s. 624.404(6), so authorized prior to the effective date of this code, a title insurer shall be a stock insurer.

(4) A health insurer may also transact excess insurance, specific and aggregate, for self-insurers of a plan of health insurance and multiple-employer welfare arrangements and reinsurance for the medical and lost wages benefits provided under a workers’ compensation insurance policy.

§624.407 FS | Surplus Required; New Insurers

(1) To receive authority to transact any one kind or combinations of kinds of insurance, as defined in part V of this chapter, an insurer applying for its original certificate of authority in this state shall possess surplus as to policyholders at least the greater of:

(a) For a property and casualty insurer, $5 million, or $2.5 million for any other insurer;

(b) For life insurers, 4 percent of the insurer’s total liabilities;

(c) For life and health insurers, 4 percent of the insurer’s total liabilities, plus 6 percent of the insurer’s liabilities relative to health insurance;

(d) For all insurers other than life insurers and life and health insurers, 10 percent of the insurer’s total liabilities;

(e) Notwithstanding paragraph (a) or paragraph (d), for a domestic insurer that transacts residential property insurance and is:

1. Not a wholly owned subsidiary of an insurer domiciled in any other state, $15 million.

2. A wholly owned subsidiary of an insurer domiciled in any other state, $50 million;

(f) Notwithstanding paragraphs (a), (d), and (e), for a domestic insurer that only transacts limited sinkhole coverage insurance for personal lines residential property pursuant to s. 627.7151, $7.5 million; or

(g) Notwithstanding paragraphs (a), (d), and (e), for an insurer that only transacts residential property insurance in the form of renter’s insurance, tenant’s coverage, cooperative unit owner insurance, or any combination thereof, $10 million.

(2) Notwithstanding subsection (1), a new insurer may not be required to have surplus as to policyholders greater than $100 million.

(3) The requirements of this section shall be based upon all the kinds of insurance actually transacted or to be transacted by the insurer in any and all areas in which it operates, whether or not only a portion of such kinds of insurance are transacted in this state.

(4) As to surplus as to policyholders required for qualification to transact one or more kinds of insurance, domestic mutual insurers are governed by chapter 628, and domestic reciprocal insurers are governed by chapter 629.

(5) For the purposes of this section, liabilities do not include liabilities required under s. 625.041(5). For purposes of computing minimum surplus as to policyholders pursuant to s. 625.305(1), liabilities include liabilities required under s. 625.041(5).

§624.40711 FS | Restrictions on Insurers That Are Wholly Owned Subsidiaries of Insurers to Do Business in State

Notwithstanding any other provision of law:

(1) A new certificate of authority for the transaction of residential property insurance may not be issued to any insurer domiciled in this state that is a wholly owned subsidiary of an insurer authorized to do business in any other state.

(2) The rate filings of any insurer domiciled in this state that is a wholly owned subsidiary of an insurer authorized to do business in any other state shall include information relating to the profits of the parent company of the insurer domiciled in this state.

§624.4073 FS | Officers and Directors of Insolvent Insurers

Any person who was an officer or director of an insurer doing business in this state and who served in that capacity within the 2-year period before the date the insurer became insolvent, for any insolvency that occurs on or after July 1, 2002, may not thereafter serve as an officer or director of an insurer authorized in this state or have direct or indirect control over the selection or appointment of an officer or director through contract, trust, or by operation of law, unless the officer or director demonstrates that his or her personal actions or omissions were not a significant contributing cause to the insolvency.

§624.408 FS | Surplus Required; Current Insurers

(1) To maintain a certificate of authority to transact any one kind or combinations of kinds of insurance, as defined in part V of this chapter, an insurer in this state must at all times maintain surplus as to policyholders at least the greater of:

(a) Except as provided in paragraphs (e), (f), and (g), $1.5 million.

(b) For life insurers, 4 percent of the insurer’s total liabilities.

(c) For life and health insurers, 4 percent of the insurer’s total liabilities plus 6 percent of the insurer’s liabilities relative to health insurance.

(d) For all insurers other than mortgage guaranty insurers, life insurers, and life and health insurers, 10 percent of the insurer’s total liabilities.

(e) For property and casualty insurers, $4 million, except for property and casualty insurers authorized to underwrite any line of residential property insurance.

(f) For residential property insurers not holding a certificate of authority before July 1, 2011, $15 million.

(g) For residential property insurers holding a certificate of authority before July 1, 2011, and until June 30, 2016, $5 million; on or after July 1, 2016, and until June 30, 2021, $10 million; on or after July 1, 2021, $15 million.

(h) Notwithstanding paragraphs (e), (f), and (g), for a domestic insurer that only transacts limited sinkhole coverage insurance for personal lines residential property pursuant to s. 627.7151, $7.5 million.

(i) Notwithstanding paragraphs (a), (d), and (e), for an insurer that only transacts residential property insurance in the form of renter’s insurance, tenant’s coverage, cooperative unit owner insurance, or any combination thereof, $10 million.

The office may reduce the surplus requirement in paragraphs (f) and (g) if the insurer is not writing new business, has premiums in force of less than $1 million per year in residential property insurance, or is a mutual insurance company.

(2) For purposes of this section, liabilities do not include liabilities required under s. 625.041(5). For purposes of computing minimum surplus as to policyholders pursuant to s. 625.305(1), liabilities include liabilities required under s. 625.041(5).

(3) This section does not require an insurer to have surplus as to policyholders greater than $100 million.

(4) A mortgage guaranty insurer shall maintain a minimum surplus as required by s. 635.042.

§624.4085 FS | Risk-Based Capital Requirements for Insurers

(1) As used in this section, the term:

(a) “Adjusted risk-based capital report” means a risk-based capital report that has been adjusted by the office in accordance with this section.

(b) “Authorized control level risk-based capital” means the number determined under the risk-based capital formula in the risk-based capital instructions.

(c) “Company action level risk-based capital” means the product of 2.0 and an insurer’s authorized control level risk-based capital.

(d) “Corrective order” means an order issued by the office specifying corrective actions that the office has determined are required.

(e) “Domestic insurer” means any insurer domiciled in this state.

(f) “Foreign insurer” means any insurer that is authorized or eligible to do business in this state but that is not domiciled in this state.

(g) “Life and health insurer” means an insurer authorized or eligible under the Florida Insurance Code to underwrite life or health insurance. The term includes a property and casualty insurer that writes accident and health insurance only. Effective January 1, 2015, the term also includes a health maintenance organization that is authorized in this state and one or more other states, jurisdictions, or countries and a prepaid limited health service organization that is authorized in this state and one or more other states, jurisdictions, or countries.

(h) “Mandatory control level risk-based capital” means the product of 0.70 and the authorized control level risk-based capital.

(i) “Negative trend” means, with respect to a life and health insurer, a negative trend over a period of time, as determined in accordance with the trend test calculation included in the risk-based capital instructions.

(j) “Property and casualty insurer” means any insurer licensed under the Florida Insurance Code, but does not include a single-line mortgage guaranty insurer, financial guaranty insurer, or title insurer or a life and health insurer.

(k) “Regulatory action level risk-based capital” means the product of 1.5 and an insurer’s authorized control level risk-based capital.

(l) “Revised risk-based capital plan” means the revision of the risk-based capital plan which is prepared by an insurer after the office rejects the original plan.

(m) “Risk-based capital instructions” means the instructions for preparing a risk-based capital report as adopted by the National Association of Insurance Commissioners.

(n) “Risk-based capital level” means an insurer’s company action level risk-based capital, regulatory action level risk-based capital, authorized control level risk-based capital, or mandatory control level risk-based capital.

(o) “Risk-based capital plan” means a comprehensive financial plan specified in paragraph (4)(b).

(p) “Risk-based capital report” means the report required in subsection (2).

(q) “Total adjusted capital” means the sum of:

1. An insurer’s statutory capital and surplus; and

2. Any other item required by the risk-based capital instructions.

(2)

(a) Each domestic insurer that is subject to this section shall, on or before March 1 of each year, prepare and file with the National Association of Insurance Commissioners a report of its risk-based capital levels as of the end of the calendar year just ended, in a form and containing the information required in the risk-based capital instructions. In addition, each domestic insurer shall file a printed copy of its risk-based capital report:

1. With the office on or before March 1 of each year.

2. With the insurance department in any other state in which the insurer is authorized to do business, if that department has notified the insurer of its request in writing, in which case the insurer shall file its risk-based capital report not later than the later of:

a. Fifteen days after the receipt of notice to file its risk-based capital report with that state; or

b. March 1.

(b) The comparison of an insurer’s total adjusted capital to any of its risk-based capital levels is a regulatory tool that may indicate the need for possible corrective action with respect to the insurer, and may not be used as a means to rank insurers generally. Therefore, except as otherwise required under this section, the making, publishing, disseminating, circulating, or placing before the public, or causing, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in a newspaper, magazine, or other publication, or in the form of a notice, circular, pamphlet, letter, or poster, or over any radio or television station, or in any other way, an advertisement, announcement, or statement containing an assertion, representation, or statement with regard to the risk-based capital levels of any insurer, or of any component derived in the calculation, by any insurer, agent, broker, or other person engaged in any manner in the insurance business would be misleading and is therefore prohibited; however, if any materially false statement with respect to the comparison regarding an insurer’s total adjusted capital to its risk-based capital levels (or any of them) or an inappropriate comparison of any other amount to the insurer’s risk-based capital levels is published in any written publication and the insurer is able to demonstrate to the office with substantial proof the falsity or inappropriateness of the statement, the insurer may publish in a written publication an announcement the sole purpose of which is to rebut the materially false statement.

(c) The office shall use the risk-based capital instructions, risk-based capital reports, adjusted risk-based capital reports, risk-based capital plans, and revised risk-based capital plans solely for monitoring the solvency of insurers and assessing the need for corrective action with respect to insurers. The office may not use that information for ratemaking, as evidence in any rate proceeding, or for calculating or deriving any elements of an appropriate premium level or rate of return for any line of insurance which an insurer or an affiliate of such insurer is authorized to write.

(d) A life and health insurer’s risk-based capital is determined in accordance with the formula set forth in the risk-based capital instructions. The formula takes into account and may adjust for the covariance between:

1. The risk with respect to the insurer’s assets;

2. The risk of adverse insurance experience with respect to the insurer’s liabilities and obligations;

3. The interest rate risk with respect to the insurer’s business; and

4. Any other business or other relevant risk set out in the risk-based capital instructions, determined in each case by applying the factors in the manner set forth in the risk-based capital instructions. This paragraph does not apply to a health maintenance organization or a prepaid limited health service organization.

(e) A property and casualty insurer’s and, if subject to this section pursuant to paragraph (1)(g), a health maintenance organization’s or a prepaid limited health service organization’s, risk-based capital is determined in accordance with the formula set forth in the risk-based capital instructions. The formula takes into account and may adjust for the covariance between:

1. The asset risk;

2. The credit risk;

3. The underwriting risk; and

4. Any other business or other relevant risk set out in the risk-based capital instructions, determined in each case by applying the factors in the manner set forth in the risk-based capital instructions.

(f) The Legislature finds that an excess of capital over the amount produced by the risk-based capital requirements and the formulas, schedules, and instructions specified in this section is a desirable goal with respect to the business of insurance. Accordingly, insurers should seek to maintain capital above the risk-based capital levels required by this section. Additional capital is used and useful in the insurance business and helps to secure an insurer against various risks inherent in, or affecting, the business of insurance and not accounted for or only partially measured by the risk-based capital requirements contained in this section.

(g) If a domestic insurer files a risk-based capital report that the office finds is inaccurate, the office shall adjust the risk-based capital report to correct the inaccuracy and shall notify the insurer of the adjustment. The notice must state the reason for the adjustment. A risk-based capital report that is so adjusted is referred to as the adjusted risk-based capital report. The adjusted risk-based capital report must also be filed by the insurer with the National Association of Insurance Commissioners.

(3)

(a) A company action level event includes:

1. The filing of a risk-based capital report by an insurer which indicates that:

a. The insurer’s total adjusted capital is greater than or equal to its regulatory action level risk-based capital but less than its company action level risk-based capital;

b. If a life and health insurer reports using the life and health annual statement instructions, the insurer has total adjusted capital that is greater than or equal to its company action level risk-based capital, but is less than the product of its authorized control level risk-based capital and 3.0, and has a negative trend;

c. Effective January 1, 2015, if a life and health or property and casualty insurer reports using the health annual statement instructions, the insurer or organization has total adjusted capital that is greater than or equal to its company action level risk-based capital, but is less than the product of its authorized control level risk-based capital and 3.0, and triggers the trend test determined in accordance with the trend test calculation included in the Risk-Based Capital Forecasting and Instructions, Health, updated annually by the NAIC; or

d. If a property and casualty insurer reports using the property and casualty annual statement instructions, the insurer has total adjusted capital that is greater than or equal to its company action level risk-based capital, but less than the product of its authorized control level risk-based capital and 3.0, and triggers the trend test determined in accordance with the trend test calculation included in the Risk-Based Capital Forecasting and Instructions, Property/Casualty, updated annually by the NAIC;

2. The notification by the office to the insurer of an adjusted risk-based capital report that indicates an event in subparagraph 1., unless the insurer challenges the adjusted risk-based capital report under subsection (7); or

3. If, under subsection (7), an insurer challenges an adjusted risk-based capital report that indicates an event in subparagraph 1., the notification by the office to the insurer that the office has, after a hearing, rejected the insurer’s challenge.

(b) If a company action level event occurs, the insurer shall prepare and submit to the office a risk-based capital plan, which must:

1. Identify the conditions that contribute to the company action level event;

2. Contain proposals of corrective actions that the insurer intends to take and that are reasonably expected to result in the elimination of the company action level event;

3. Provide projections of the insurer’s financial results in the current year and at least the 4 succeeding years, both in the absence of proposed corrective actions and giving effect to the proposed corrective actions, including projections of statutory operating income, net income, capital, and surplus. The projections for both new and renewal business may include separate projections for each major line of business and, if separate projections are provided, must separately identify each significant income, expense, and benefit component;

4. Identify the key assumptions affecting the insurer’s projections and the sensitivity of the projections to the assumptions; and

5. Identify the quality of, and problems associated with, the insurer’s business, including, but not limited to, its assets, anticipated business growth and associated surplus strain, extraordinary exposure to risk, mix of business, and any use of reinsurance.

(c) The risk-based capital plan must be submitted:

1. Within 45 days after the company action level event; or

2. If the insurer challenges an adjusted risk-based capital report under subsection (7), within 45 days after notification to the insurer that the office has, after a hearing, rejected the insurer’s challenge.

(d) Within 60 days after the submission by an insurer of a risk-based capital plan to the office, the office shall notify the insurer whether the risk-based capital plan must be implemented or is, in the judgment of the office, unsatisfactory. If the office determines that the risk-based capital plan is unsatisfactory, the notification to the insurer must set forth the reasons for the determination and may set forth proposed revisions. Upon notification from the office, the insurer shall prepare a revised risk-based capital plan, which may incorporate by reference any revisions proposed by the office, and shall submit the revised risk-based capital plan to the office:

1. Within 45 days after the notification from the office; or

2. If the insurer challenges the notification from the office under subsection (7), within 45 days after a notification to the insurer that the office has, after a hearing, rejected the insurer’s challenge.

(e) If the office notifies an insurer that the insurer’s risk-based capital plan or revised risk-based capital plan is unsatisfactory, the office may, at its discretion and subject to the insurer’s right to a hearing under subsection (7), specify in the notification that the notification is a regulatory action level event.

(f) Each domestic insurer that files a risk-based capital plan or a revised risk-based capital plan with the office shall file a copy of the risk-based capital plan or the revised risk-based capital plan with the insurance department in any other state in which the insurer is authorized to do business if:

1. That state has a risk-based capital law that is substantially similar to paragraph (8)(a); and

2. The insurance department of that state has notified the insurer of its request for the filing in writing, in which case the insurer shall file a copy of the risk-based capital plan or the revised risk-based capital plan in that state no later than the later of:

a. Fifteen days after the receipt of notice to file a copy of its risk-based capital plan or revised risk-based capital plan with the state; or

b. The date on which the risk-based capital plan or the revised risk-based capital plan is filed under paragraph (c) or paragraph (d).

(4)

(a) A regulatory action level event includes:

1. The filing of a risk-based capital report by the insurer which indicates that the insurer’s total adjusted capital is greater than or equal to its authorized control level risk-based capital but is less than its regulatory action level risk-based capital;

2. The notification by the office to the insurer of an adjusted risk-based capital report that indicates the event described in subparagraph 1., unless the insurer challenges the adjusted risk-based capital report under subsection (7);

3. If, under subsection (7), the insurer challenges an adjusted risk-based capital report that indicates the event described in subparagraph 1., the notification by the office to the insurer that the office has, after a hearing, rejected the insurer’s challenge;

4. The failure of the insurer to file a risk-based capital report by the filing date, unless the insurer provides an explanation for such failure which is satisfactory to the office and cures the failure within 10 days after the filing date;

5. The failure of the insurer to submit a risk-based capital plan to the office within the time period set forth in paragraph (3)(c);

6. Notification by the office to the insurer that:

a. The risk-based capital plan or the revised risk-based capital plan submitted by the insurer is, in the judgment of the office, unsatisfactory; and

b. This notification constitutes a regulatory action level event with respect to the insurer, unless the insurer challenges the determination under subsection (7);

7. If, under subsection (7), the insurer challenges a determination by the office under subparagraph 6., the notification by the office to the insurer that the office has, after a hearing, rejected the challenge;

8. Notification by the office to the insurer that the insurer has failed to adhere to its risk-based capital plan or revised risk-based capital plan, but only if this failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its risk-based capital plan or revised risk-based capital plan and the office has so stated in the notification, unless the insurer challenges the determination under subsection (7); or

9. If, under subsection (7), the insurer challenges a determination by the office under subparagraph 8., the notification by the office to the insurer that the office has, after a hearing, rejected the challenge.

(b) If a regulatory action level event occurs, the office shall:

1. Require the insurer to prepare and submit a risk-based capital plan or, if applicable, a revised risk-based capital plan;

2. Perform an examination pursuant to s. 624.316 or an analysis, as the office considers necessary, of the assets, liabilities, and operations of the insurer, including a review of the risk-based capital plan or the revised risk-based capital plan; and

3. After the examination or analysis, issue a corrective order specifying such corrective actions as the office determines are required.

(c) In determining corrective actions, the office shall consider any factor relevant to the insurer based upon the office’s examination or analysis of the assets, liabilities, and operations of the insurer, including, but not limited to, the results of any sensitivity tests undertaken as provided in the risk-based capital instructions. The risk-based capital plan or the revised risk-based capital plan must be submitted:

1. Within 45 days after the occurrence of the regulatory action level event;

2. If the insurer challenges an adjusted risk-based capital report under subsection (7), within 45 days after the notification to the insurer that the office has, after a hearing, rejected the insurer’s challenge; or

3. If the insurer challenges a revised risk-based capital plan under subsection (7), within 45 days after the notification to the insurer that the office has, after a hearing, rejected the insurer’s challenge.

(d) The office may retain actuaries, investment experts, and other consultants to review an insurer’s risk-based capital plan or revised risk-based capital plan, examine or analyze the assets, liabilities, and operations of an insurer, and formulate the corrective order with respect to the insurer. The fees, costs, and expenses relating to consultants must be borne by the affected insurer or by any other party as directed by the office.

(5)

(a) An authorized control level event includes:

1. The filing of a risk-based capital report by the insurer which indicates that the insurer’s total adjusted capital is greater than or equal to its mandatory control level risk-based capital but is less than its authorized control level risk-based capital;

2. The notification by the office to the insurer of an adjusted risk-based capital report that indicates the event in subparagraph 1., unless the insurer challenges the adjusted risk-based capital report under subsection (7);

3. If, under subsection (7), the insurer challenges an adjusted risk-based capital report that indicates the event in subparagraph 1., notification by the office to the insurer that the office has, after a hearing, rejected the insurer’s challenge;

4. The failure of the insurer to respond, in a manner satisfactory to the office, to a corrective order, unless the insurer challenges the corrective order under subsection (7); or

5. If the insurer challenges a corrective order under subsection (7) and the office has, after a hearing, rejected the challenge or modified the corrective order, the failure of the insurer to respond, in a manner satisfactory to the office, to the corrective order after rejection or modification by the office.

(b) If an authorized control level event occurs, the office shall:

1. Take any action required under subsection (4) regarding the insurer with respect to which a regulatory action level event has occurred; or

2. If the office considers it to be in the best interests of the policyholders and creditors of the insurer and of the public, take any action as necessary to cause the insurer to be placed under regulatory control under chapter 631. An authorized control level event is sufficient ground for the department to be appointed as receiver as provided in chapter 631.

(6)

(a) A mandatory control level event includes:

1. The filing of a risk-based capital report that indicates that the insurer’s total adjusted capital is less than its mandatory control level risk-based capital;

2. Notification by the office to the insurer of an adjusted risk-based capital report that indicates the event in subparagraph 1., unless the insurer challenges the adjusted risk-based capital report under subsection (7); or

3. If, under subsection (7), the insurer challenges an adjusted risk-based capital report that indicates the event in subparagraph 1., notification by the office to the insurer that the office has, after a hearing, rejected the insurer’s challenge.

(b) If a mandatory control level event occurs:

1. With respect to a life and health insurer, the office shall, after due consideration of s. 624.408, and effective January 1, 2015, ss. 636.045 and 641.225, take any action necessary to place the insurer under regulatory control, including any remedy available under chapter 631. A mandatory control level event is sufficient ground for the department to be appointed as receiver as provided in chapter 631. The office may forego taking action for up to 90 days after the mandatory control level event if the office finds there is a reasonable expectation that the event may be eliminated within the 90-day period.

2. With respect to a property and casualty insurer, the office shall, after due consideration of s. 624.408, take any action necessary to place the insurer under regulatory control, including any remedy available under chapter 631, or, in the case of an insurer that is not writing new business, may allow the insurer to continue to operate under the supervision of the office. In either case, the mandatory control level event is sufficient ground for the department to be appointed as receiver as provided in chapter 631. The office may forego taking action for up to 90 days after the mandatory control level event if the office finds there is a reasonable expectation that the event may be eliminated within the 90-day period.

(7)

(a) An insurer has a right to a hearing before the office upon:

1. Notification to an insurer by the office of an adjusted risk-based capital report;

2. Notification to an insurer by the office that the insurer’s risk-based capital plan or revised risk-based capital plan is unsatisfactory, and that the notification constitutes a regulatory action level event with respect to such insurer;

3. Notification to any insurer by the office that the insurer has failed to adhere to its risk-based capital plan or revised risk-based capital plan and that the failure has a substantial adverse effect on the ability of the insurer to eliminate the company action level event in accordance with its risk-based capital plan or its revised risk-based capital plan; or

4. Notification to an insurer by the office of a corrective order with respect to the insurer.

(b) At such hearing the insurer may challenge any determination or action by the office. The insurer shall notify the office of its request for a hearing within 5 days after receipt of the notification by the office under this subsection. Upon receipt of the request for a hearing, the office shall set a date for the hearing, which date must be no fewer than 10 nor more than 30 days after the date the office receives the insurer’s request. The hearing must be conducted as provided in s. 624.324, with the right to appellate review under s. 120.68.

(8)

(a) Any foreign insurer shall, upon the written request of the office, submit to the office a risk-based capital report, as of the end of the calendar year just ended, no later than the later of:

1. The date a risk-based capital report is required to be filed by a domestic insurer under this section; or

2. Fifteen days after the request is received by the foreign insurer.

(b) Any foreign insurer shall, upon the written request of the office, promptly submit to the office a copy of any risk-based capital plan that is filed with the insurance department of another state.

(c) The office may require a foreign insurer to file a risk-based capital plan if:

1. A company action level event, regulatory action level event, or authorized control level event occurs with respect to any foreign insurer as determined under the risk-based capital law of the state of domicile of the insurer, or, if there is no risk-based capital law in that state, under this section.

2. The insurance department of the state of domicile of the foreign insurer fails to require the foreign insurer to file a risk-based capital plan in the manner specified under the risk-based capital law of that state, or, if there is no risk-based capital law in that state, under subsection (3).

The failure of the foreign insurer to file a risk-based capital plan with the office when required under this paragraph is a ground for the office to take any action under s. 624.418 which it determines is necessary.

(d) If a mandatory control level event occurs with respect to any foreign insurer and a domiciliary receiver has not been appointed with respect to the foreign insurer under the rehabilitation and liquidation law of the state of domicile of the foreign insurer, the office may apply to the Circuit Court of Leon County and such event constitutes grounds for the department to be appointed as receiver as provided in chapter 631 with respect to the liquidation of property of foreign insurers found in this state. The occurrence of a mandatory control level event is a ground for such application.

(9) There shall be no liability on the part of, and no cause of action shall arise against, the commission, department, or office, or their employees or agents, for any action taken by them in the performance of their powers and duties under this section.

(10) The office shall transmit any notice that may result in regulatory action by registered mail, certified mail, or any other method of transmission. Notice is effective when the insurer receives it.

(11) This section is supplemental to the other laws of this state and does not preclude or limit any power or duty of the department or office under those laws or under the rules adopted under those laws.

(12) This section does not apply to a domestic property and casualty insurer that meets all of the following conditions:

(a) Writes direct business only in this state;

(b) Writes direct annual premiums of $2 million or less; and

(c) Assumes no reinsurance in excess of 5 percent of direct premiums written.

(13) The commission may adopt rules to administer this section, including, but not limited to, those regarding risk-based capital reports, adjusted risk-based capital reports, risk-based capital plans, corrective orders and procedures to be followed in the event of a triggering of a company action level event, a regulatory action level event, an authorized control level event, or a mandatory control level event.

§624.40851 FS | Risk-Based Capital Requirements for Insurers

(1) The initial risk-based capital report and any adjusted risk-based capital report; any risk-based capital plan and any revised risk-based capital plan; and working papers and reports of examination or analysis of an insurer performed pursuant to a plan or corrective order, or regulatory action level event, with respect to any domestic insurer or foreign insurer, held by the office, and transcripts of hearings made as required by this section, are confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution.

(2) Hearings conducted pursuant to s. 624.4085 relating to the office’s actions regarding any insurer’s risk-based capital plan, revised risk-based capital plan, risk-based capital report, or adjusted risk-based capital report, are exempt from s. 286.011 and s. 24(b), Art. I of the State Constitution, except as otherwise provided in this section. Such hearings shall be recorded by a court reporter. The office shall open such hearings or provide a copy of the transcript of such hearings or information otherwise made confidential and exempt pursuant to this section to a department, agency, or instrumentality of this or another state or of the United States if the office determines the disclosure is necessary or proper for the enforcement of the laws of the United States or of this or another state.

(3) The exemptions provided by this section shall terminate:

(a) One year following the conclusion of any risk-based capital plan or revised risk-based capital plan; or

(b) On the date of entry of an order of seizure, rehabilitation, or liquidation pursuant to chapter 631.

§624.4094 FS | Bail Bond Premiums

(1) The Legislature finds that a significant portion of bail bond premiums is retained by the licensed bail bond agents or appointed managing general agents. For purposes of reporting in financial statements required to be filed with the office pursuant to s. 624.424, direct written premiums for bail bonds by a domestic insurer in this state shall be reported net of any amounts retained by licensed bail bond agents or appointed managing general agents. However, in no case shall the direct written premiums for bail bonds be less than 6.5 percent of the total consideration received by the agent for all bail bonds written by the agent. This subsection also applies to any determination of compliance with s. 624.4095.

(2) Premiums assumed by a domestic insurer shall be reported consistent with subsections (1) and (4) for purposes of filing financial statements with the office.

(3) Each domestic bail bond insurer shall keep complete and accurate records of the total consideration paid for all bail bonds written by such insurer.

(4) Each domestic bail bond insurer shall disclose the following information in the notes to the financial statement in the insurer’s annual statement filed with the office.

(a) The gross bail bond premiums written in each state by agents for the company.

(b) The amount of premium taxes incurred by the company in each state.

(c) Total consideration withheld by agents and not reported as an expense by the insurer in financial statements filed with the office.

(d) The amount of bail bond premium included on the surety line of the annual statement filed with the office.

§624.4095 FS | Premiums Written; Restrictions

(1) Whenever an insurer’s ratio of actual or projected annual written premiums as adjusted in accordance with subsection (4) to current or projected surplus as to policyholders as adjusted in accordance with subsection (6) exceeds 10 to 1 for gross written premiums or exceeds 4 to 1 for net written premiums, the office shall suspend the insurer’s certificate of authority or establish by order maximum gross or net annual premiums to be written by the insurer consistent with maintaining the ratios specified herein unless the insurer demonstrates to the office’s satisfaction that exceeding the ratios of this section does not endanger the financial condition of the insurer or endanger the interests of the insurer’s policyholders.

(2) Projected annual net or gross premiums shall be based on the actual writings to date for the insurer’s current calendar year or the insurer’s writings for the previous calendar year or both. Ratios shall be computed on an annualized basis.

(3) For the purposes of this section, gross premiums written means direct premiums written and reinsurance assumed.

(4) For the purposes of this section, for the calendar year ending December 31, 1990, and each subsequent year, premiums shall be calculated as the product of the actual or projected premiums and the following:

(a) For property insurance, 0.90.

(b) For casualty insurance, 1.25.

(c) For health insurance, 0.80.

(d) For all other kinds of insurance, 1.00.

(5) This section shall not apply to:

(a) Life insurance written by life or life and health insurers; or

(b) Life and health insurers which have a surplus as to policyholders greater than $40 million and which have written health insurance during each of the immediately preceding five calendar years.

(6) For the purposes of this section, surplus as to policyholders for life and health insurers shall be calculated as follows: (actual or projected surplus as to policyholders) minus (surplus as to policyholders required to be maintained under s. 624.408 for liabilities relating to life insurance).

(7) For purposes of ss. 624.407 and 624.408 and this section, with regard to capital and surplus required, gross written premiums for federal multiple-peril crop insurance that is ceded to the Federal Crop Insurance Corporation and authorized reinsurers shall not be included when calculating the insurer’s gross writing ratio. The liabilities for ceded reinsurance premiums payable for federal multiple-peril crop insurance ceded to the Federal Crop Insurance Corporation and authorized reinsurers shall be netted against the asset for amounts recoverable from reinsurers. Each insurer that writes other insurance products together with federal multiple-peril crop insurance shall disclose in the notes to the annual and quarterly financial statement, or file a supplement to the financial statement that discloses, a breakout of the gross written premiums for federal multiple-peril crop insurance.

§624.410 FS | Permissible Insuring Combinations Without Additional Capital Funds

A property insurer may include such amount and kind of insurance against legal liability for injury, damage, or loss to the person or property of others, and for medical, hospital, and surgical expense related to such injury, as the office deems to be reasonably incidental to insurance of real property against fire and other perils under policies covering residential properties involving not more than four families, with or without incidental office, professional, private school or studio occupancy by an insured, whether or not the premium or rate charged for certain perils so covered is specified in the policy. Any provision of s. 624.609 to the contrary notwithstanding, no insurer authorized as to property insurance only shall, pursuant to this subsection, retain risk as to any one subject of insurance as to hazards other than property insurance hazards, in an amount exceeding 5 percent of its surplus as to policyholders.

§624.411 FS | Deposit Requirement; Domestic Insurers and Foreign Insurers

(1) As to domestic insurers, the office shall not issue or permit to exist a certificate of authority unless such insurer has deposited and maintains deposited in trust for the protection of the insurer’s policyholders or its policyholders and creditors with the department securities eligible for such deposit under s. 625.52, having at all times a value of not less than as follows:

(a) To transact casualty insurance, $250,000.

(b) To transact all other kinds of insurance, $100,000 per kind of insurance.

(c) A domestic insurer authorized to transact more than one kind of insurance shall not be required to deposit more than $300,000 under this subsection.

(2) As to foreign insurers, the office, upon issuing or permitting to exist a certificate of authority, may require for good cause a deposit and maintenance of the deposit in trust for the protection of the insured’s policyholders or its policyholders and creditors with the department securities eligible for such deposit under s. 625.52, having at all times a value of not less than as follows:

(a) To transact casualty insurance, $150,000.

(b) To transact all other kinds of insurance, $100,000 per kind of insurance.

(c) A foreign insurer authorized to transact more than one kind of insurance in this state shall not be required to deposit more than $200,000 under this subsection.

(d) A foreign insurer with surplus as to policyholders of more than $10 million according to its latest annual statement shall not be required to make a deposit under this subsection.

(3) Whenever the office determines that the financial condition of an insurer has deteriorated or that the policyholders’ best interests are not being preserved by the activities of an insurer, the office may require such insurer to deposit and maintain deposited in trust with the department for the protection of the insurer’s policyholders or its policyholders and creditors, for such time as the office deems necessary, securities eligible for such deposit under s. 625.52, having a market value of not less than the amount which the office determines is necessary, which amount shall be not less than $100,000, or more than 25 percent of the insurer’s obligations in this state, as determined from the latest annual financial statement of the insured. The deposit required under this subsection shall not exceed $2 million and is in addition to any other deposits required of an insurer pursuant to subsections (1) and (2) or any other provisions of the Florida Insurance Code.

(4) All such deposits in this state are subject to the applicable provisions of part III of chapter 625.

§624.412 FS | Deposit of Alien Insurers

(1) An alien insurer shall not have authority to transact insurance in this state unless it has and maintains within the United States as trust deposits with public officials having supervision over insurers, or with trustees, public depositories, or trust institutions approved by the office, assets available for discharge of its United States insurance obligations, which assets shall be in amount not less than the outstanding reserves and other liabilities of the insurer arising out of its insurance transactions in the United States together with the amount of surplus as to policyholders required by s. 624.408 of a domestic stock insurer transacting like kinds of insurance.

(2) Any such deposit made in this state shall be held for the protection of the insurer’s policyholders or policyholders and creditors in the United States and shall be subject to the applicable provisions of part III of chapter 625 and chapter 630.

§624.413 FS | Application for Certificate of Authority

(1) To apply for a certificate of authority, an insurer shall file its application therefor with the office, upon a form adopted by the commission and furnished by the office, showing its name; location of its home office and, if an alien insurer, its principal office in the United States; kinds of insurance to be transacted; state or country of domicile; and such additional information as the commission reasonably requires, together with the following documents:

(a) One copy of its corporate charter, articles of incorporation, existing and proposed nonfacultative reinsurance contracts, declaration of trust, or other charter documents, with all amendments thereto, certified by the public official with whom the originals are on file in the state or country of domicile.

(b) If a mutual insurer, a copy of its bylaws, as amended, certified by its secretary or other officer having custody thereof.

(c) If a foreign or alien reciprocal insurer, a copy of the power of attorney of its attorney in fact and of its subscribers’ agreement, if any, certified by the attorney in fact; and, if a domestic reciprocal insurer, the declaration provided for in s. 629.081.

(d) A copy of its financial statement as of December 31 next preceding, containing information generally included in insurer financial statements prepared in accordance with generally accepted insurance accounting principles and practices and in a form generally utilized by insurers for financial statements, sworn to by at least two executive officers of the insurer, or certified by the public official having supervision of insurance in the insurer’s state of domicile or of entry into the United States. To facilitate uniformity in financial statements, the commission may by rule adopt the form for financial statements approved by the National Association of Insurance Commissioners in 2002, and may adopt subsequent amendments thereto if the form remains substantially consistent.

(e) Supplemental quarterly financial statements for each calendar quarter since the beginning of the year of its application for the certificate of authority, sworn to by at least two of its executive officers. To facilitate uniformity in financial statements, the commission may by rule adopt the form for quarterly financial statements approved by the National Association of Insurance Commissioners in 2002, and may adopt subsequent amendments thereto if the form remains substantially consistent.

(f) If a foreign or alien insurer, a copy of the report of the most recent examination of the insurer certified by the public official having supervision of insurance in its state of domicile or of entry into the United States. The end of the most recent year covered by the examination must be within the 5-year period preceding the date of application. In lieu of the certified examination report, the office may accept an audited certified public accountant’s report prepared on a basis consistent with the insurance laws of the insurer’s state of domicile, certified by the public official having supervision of insurance in its state of domicile or of entry into the United States.

(g) If a foreign or alien insurer, a certificate of compliance from the public official having supervision of insurance in its state or country of domicile showing that it is duly organized and authorized to transact insurance therein and the kinds of insurance it is so authorized to transact.

(h) If a foreign or alien insurer, a certificate of the public official having custody of any deposit maintained by the insurer in another state in lieu of a deposit or part thereof required in this state under s. 624.411 or s. 624.412, showing the amount of such deposit and the assets or securities of which comprised.

(i) If a life insurer, a certificate of valuation.

(j) If an alien insurer, a copy of the appointment and authority of its United States manager, certified by its officer having custody of its records.

(2) The application shall be accompanied by the applicable fees and license tax as specified in s. 624.501.

§624.4135 FS | Redomestication

The commission shall adopt rules establishing procedures and forms for a foreign insurer to apply for a certificate of authority as a domestic insurer.

§624.414 FS | Issuance or Refusal of Authority

The fee for filing application for a certificate of authority shall not be subject to refund. The office shall issue to the applicant insurer a proper certificate of authority if it finds that the insurer has met the requirements of this code, exclusive of the requirements relative to the filing and approval of an insurer’s policy forms, riders, endorsements, applications, and rates. If it does not so find, the office shall issue its order refusing the certificate. The certificate, if issued, shall specify the kind or kinds and line or lines of insurance the insurer is authorized to transact in this state. The issuance of a certificate of authority does not signify that an insurer has met the requirements of this code relative to the filing and approval of an insurer’s policy forms, riders, endorsements, applications, and rates which may be required prior to an insurer actually writing any premiums.

§624.415 FS | Ownership of Certificate of Authority; Return

Although issued to the insurer, the certificate of authority is at all times the property of this state. Upon any expiration, suspension, or termination thereof, the insurer shall promptly deliver the certificate of authority to the office.

§624.416 FS | Continuance, Expiration, Reinstatement, and Amendment of Certificate of Authority

(1) A certificate of authority issued under this code shall continue in force as long as the insurer is entitled thereto under this code and until suspended, revoked, or terminated at the request of the insurer; subject, however, to continuance of the certificate by the insurer each year by:

(a) Payment prior to June 1 of the annual license tax provided for in s. 624.501(3);

(b) Due filing by the insurer of its annual statement for the calendar year preceding as required under s. 624.424; and

(c) Payment by the insurer of applicable taxes with respect to the preceding calendar year as required under this code.

(2) If not so continued by the insurer, its certificate of authority shall expire at midnight on the May 31 next following such failure of the insurer so to continue it in force. The office shall promptly notify the insurer of the occurrence of any failure resulting in impending expiration of its certificate of authority.

(3) The office may, in its discretion, reinstate a certificate of authority which the insurer has inadvertently permitted to expire, after the insurer has fully cured all its failures which resulted in the expiration, and upon payment by the insurer of the fee for reinstatement, in the amount provided in s. 624.501(1)(b). Otherwise, the insurer shall be granted another certificate of authority only after filing application therefor and meeting all other requirements as for an original certificate of authority in this state.

(4) The office may amend a certificate of authority at any time to accord with changes in the insurer’s charter or insuring powers.

§624.418 FS | Suspension, Revocation of Certificate of Authority for Violations and Special Grounds

(1) The office shall suspend or revoke an insurer’s certificate of authority if it finds that the insurer:

(a) Is in unsound financial condition.

(b) Is using such methods and practices in the conduct of its business as to render its further transaction of insurance in this state hazardous or injurious to its policyholders or to the public.

(c) Has failed to pay any final judgment rendered against it in this state within 60 days after the judgment became final.

(d) No longer meets the requirements for the authority originally granted.

(2) The office may, in its discretion, suspend or revoke the certificate of authority of an insurer if it finds that the insurer:

(a) Has violated any lawful order or rule of the office or commission or any provision of this code.

(b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or to perform any other legal obligation as to such examination, when required by the office.

(c) Has for any line, class, or combination thereof, with such frequency as to indicate its general business practice in this state, without just cause:

1. Refused to pay proper claims arising under its policies, whether any such claim is in favor of an insured or is in favor of a third person with respect to the liability of an insured to such third person, or without just cause compels such insureds or claimants to accept less than the amount due them or to employ attorneys or to bring suit against the insurer or such an insured to secure full payment or settlement of such claims; or

2. Compelled insureds to participate in appraisal under a property insurance policy in order to secure full payment or settlement of such claims.

(d) Is affiliated with and under the same general management or interlocking directorate or ownership as another insurer which transacts direct insurance in this state without having a certificate of authority therefor, except as permitted as to surplus lines insurers under part VIII of chapter 626.

(e) Has been convicted of, or entered a plea of guilty or nolo contendere to, a felony relating to the transaction of insurance, in this state or in any other state, without regard to whether adjudication was withheld.

(f) Has a ratio of net premiums written to surplus as to policyholders that exceeds 4 to 1, and the office has reason to believe that the financial condition of the insurer endangers the interests of the policyholders. The ratio of net premiums written to surplus as to policyholders shall be on an annualized actual or projected basis. The ratio shall be based on the insurer’s current calendar year activities and experience to date or the insurer’s previous calendar year activities and experience, or both, and shall be calculated to represent a 12-month period. However, the provisions of this paragraph do not apply to any insurance or insurer exempted from s. 624.4095.

(g) Is under suspension or revocation in another state.

(3) The insolvency or impairment of an insurer constitutes an immediate serious danger to the public health, safety, or welfare; and the office may, at its discretion, without prior notice and the opportunity for hearing immediately suspend the certificate of authority of an insurer upon a determination that:

(a) The insurer is impaired or insolvent; or

(b) Receivership, conservatorship, rehabilitation, or other delinquency proceedings have been initiated against the insurer by the public insurance supervisory official of any state.

§624.42 FS | Order, Notice of Suspension or Revocation of Certificate of Authority; Effect; Publication

(1) Suspension or revocation of an insurer’s certificate of authority shall be by the order of the office. The office shall promptly also give notice of such suspension or revocation to the insurer’s agents in this state of record. The insurer shall not solicit or write any new coverages in this state during the period of any such suspension and may renew coverages only upon a finding by the office that the insurer is capable of servicing the renewal coverage. The insurer shall not solicit or write any new or renewal coverages after any such revocation.

(2) In its discretion, the office may cause notice of any such suspension or revocation to be published in one or more newspapers of general circulation published in this state.

§624.421 FS | Duration of Suspension; Insurer’s Obligations During Suspension Period; Reinstatement

(1) Suspension of an insurer’s certificate of authority shall be for:

(a) A fixed period of time not to exceed 2 years; or

(b) Until the occurrence of a specific event necessary for remedying the reasons for suspension.

Such suspension may be modified, rescinded, or reversed.

(2) During the period of suspension, the insurer shall file with the office all documents and information and pay all license fees and taxes as required under this code as if the certificate had continued in full force.

(3) If the suspension of the certificate of authority is for a fixed period of time and the certificate of authority has not been otherwise terminated, upon expiration of the suspension period the insurer’s certificate of authority shall be reinstated unless the office finds that the insurer is not in compliance with the requirements of this code. The office shall promptly notify the insurer of such reinstatement, and the insurer shall not consider its certificate of authority reinstated until so notified by the office. If not reinstated, the certificate of authority shall be deemed to have expired as of the end of the suspension period or upon failure of the insurer to continue the certificate during the suspension period in accordance with subsection (2), whichever event first occurs.

(4) If the suspension of the certificate of authority was until the occurrence of a specific event or events and the certificate of authority has not been otherwise terminated, upon the presentation of evidence satisfactory to the office that the specific event or events have occurred, the insurer’s certificate of authority shall be reinstated unless the office finds that the insurer is otherwise not in compliance with the requirements of this code. The office shall promptly notify the insurer of such reinstatement, and the insurer shall not consider its certificate of authority reinstated until so notified by the office. If satisfactory evidence as to the occurrence of the specific event or events has not been presented to the office within 2 years of the date of such suspension, the certificate of authority shall be deemed to have expired as of 2 years from the date of suspension or upon failure of the insurer to continue the certificate during the suspension period in accordance with subsection (2), whichever first occurs.

(5) Upon reinstatement of the insurer’s certificate of authority, the authority of its agents in this state to represent the insurer shall likewise reinstate. The office shall promptly notify the insurer of such reinstatement.

§624.4211 FS | Administrative Fine in Lieu of Suspension or Revocation

(1) If the office finds that one or more grounds exist for the discretionary revocation or suspension of a certificate of authority issued under this chapter, the office may, in lieu of such revocation or suspension, impose a fine upon the insurer.

(2)

(a) With respect to a nonwillful violation, such fine may not exceed:

1. Twenty-five thousand dollars per violation, up to an aggregate amount of $100,000 for all nonwillful violations arising out of the same action, related to a covered loss or claim caused by an emergency for which the Governor declared a state of emergency pursuant to s. 252.36.

2. Twelve thousand five hundred dollars per violation, up to an aggregate amount of $50,000 for all other nonwillful violations arising out of the same action.

(b) If an insurer discovers a nonwillful violation, the insurer shall correct the violation and, if restitution is due, make restitution to all affected persons. Such restitution shall include interest at 12 percent per year from either the date of the violation or the date of inception of the affected person’s policy, at the insurer’s option. The restitution may be a credit against future premiums due, provided that interest accumulates until the premiums are due. If the amount of restitution due to any person is $50 or more and the insurer wishes to credit it against future premiums, it shall notify such person that she or he may receive a check instead of a credit. If the credit is on a policy that is not renewed, the insurer shall pay the restitution to the person to whom it is due.

(3)

(a) With respect to a knowing and willful violation of a lawful order or rule of the office or commission or a provision of this code, the office may impose a fine upon the insurer in an amount not to exceed:

1. Two hundred thousand dollars for each such violation, up to an aggregate amount of $1 million for all knowing and willful violations arising out of the same action, related to a covered loss or claim caused by an emergency for which the Governor declared a state of emergency pursuant to s. 252.36.

2. One hundred thousand dollars for each such violation, up to an aggregate amount of $500,000 for all other knowing and willful violations arising out of the same action.

(b) In addition to such fines, the insurer shall make restitution when due in accordance with subsection (2).

(4) The failure of an insurer to make restitution when due as required under this section constitutes a willful violation of this code. However, if an insurer in good faith is uncertain as to whether any restitution is due or as to the amount of such restitution, it shall promptly notify the office of the circumstances; and the failure to make restitution pending a determination thereof shall not constitute a violation of this code.

§624.4212 FS | Confidentiality of Proprietary Business and Other Information

(1) As used in this section, the term “proprietary business information” means information, regardless of form or characteristics, which is owned or controlled by an insurer, or a person or an affiliated person who seeks acquisition of controlling stock in a domestic stock insurer or controlling company, and which:

(a) Is intended to be and is treated by the insurer or the person as private in that the disclosure of the information would cause harm to the insurer, the person, or the company’s business operations and that the information has not been disclosed unless disclosed pursuant to a statutory requirement, an order of a court or administrative body, or a private agreement that provides that the information will not be released to the public;

(b) Is not otherwise readily ascertainable or publicly available by proper means by other persons from another source in the same configuration as requested by the office; and

(c) Includes:

1. Trade secrets as defined in s. 688.002 which comply with s. 624.4213.

2. Information relating to competitive interests, the disclosure of which would impair the competitive business of the provider of the information.

3. The source, nature, and amount of the consideration used or to be used in carrying out a merger or other acquisition of control in the ordinary course of business, including the identity of the lender, if the person filing a statement regarding consideration so requests.

4. Information relating to bids or other contractual data, the disclosure of which would impair the efforts of the insurer or its affiliates to contract for goods or services on favorable terms.

5. Internal auditing controls and reports of internal auditors.

(2) Proprietary business information contained in the following items held by the office is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution:

(a) The actuarial opinion summary required under ss. 624.424(1)(b) and 625.121(3) and information related thereto.

(b) A notice filed with the office by the person or affiliated person who seeks to divest controlling stock in an insurer pursuant to s. 628.461.

(c) The filings required under s. 628.801 and information related thereto.

(d) The enterprise risk report required under ss. 628.461(3) and 628.801 and information related thereto.

(e) Information provided to or obtained by the office pursuant to participation in a supervisory college established under s. 628.805.

(f) Beginning on the operative date of the valuation manual as defined in s. 625.1212(2):

1. An actuarial examination conducted pursuant to s. 625.1212(5)(c), and information related thereto;

2. The annual certification submitted by the insurer pursuant to s. 625.1212(6)(b)2., and information related thereto;

3. The principle-based valuation report filed pursuant to s. 625.1212(6)(b)3., and information related thereto; and

4. Mortality, morbidity, policyholder behavior, or expense experience and other data submitted pursuant to s. 625.1212(7), which includes potentially company identifiable or personally identifiable information.

(3) Except for information obtained by the office which would otherwise be available for public inspection, the following information held by the office is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution:

(a) An ORSA summary report, a substantially similar ORSA report, and supporting documents submitted pursuant to s. 628.8015.

(b) A corporate governance annual disclosure and supporting documents submitted pursuant to s. 628.8015.

(4) Information received from the NAIC, a governmental entity in this or another state, the Federal Government, or a government of another nation which is confidential or exempt if held by that entity and which is held by the office for use in the performance of its duties relating to insurer valuation and solvency is confidential and exempt from s. 119.07(1) and s. 24(a), Art. I of the State Constitution.

(5) The office may disclose information made confidential and exempt under this section:

(a) If the insurer to which it pertains gives prior written consent;

(b) Pursuant to a court order;

(c) To the Actuarial Board for Counseling and Discipline upon a request stating that the information is for the purpose of professional disciplinary proceedings and specifying procedures satisfactory to the office for preserving the confidentiality of the information;

(d) To other states, federal and international agencies, the Office of Insurance Consumer Advocate, the National Association of Insurance Commissioners and its affiliates and subsidiaries, and state, federal, and international law enforcement authorities, including members of a supervisory college described in s. 628.805 if the recipient agrees in writing to maintain the confidential and exempt status of the document, material, or other information and has certified in writing its legal authority to maintain such confidentiality; or

(e) For the purpose of aggregating information on an industrywide basis and disclosing the information to the public only if the specific identities of the insurers, or persons or affiliated persons, are not revealed.

§624.4213 FS | Trade Secret Documents

(1) If any person who is required to submit documents or other information to the office or department pursuant to the insurance code or by rule or order of the office, department, or commission claims that such submission contains a trade secret, such person may file with the office or department a notice of trade secret as provided in this section. Failure to do so constitutes a waiver of any claim by such person that the document or information is a trade secret.

(a) Each page of such document or specific portion of a document claimed to be a trade secret must be clearly marked as “trade secret.”

(b) All material marked as a trade secret must be separated from all non-trade secret material, such as being submitted in a separate envelope clearly marked as “trade secret.”

(c) In submitting a notice of trade secret to the office or department, the submitting party must include an affidavit certifying under oath to the truth of the following statements concerning all documents or information that are claimed to be trade secrets:

1. [I consider/My company considers] this information a trade secret that has value and provides an advantage or an opportunity to obtain an advantage over those who do not know or use it.

2. [I have/My company has] taken measures to prevent the disclosure of the information to anyone other than those who have been selected to have access for limited purposes, and [I intend/my company intends] to continue to take such measures.

3. The information is not, and has not been, reasonably obtainable without [my/our] consent by other persons by use of legitimate means.

4. The information is not publicly available elsewhere.

(2) If the office or department receives a public records request for a document or information that is marked and certified as a trade secret, the office or department shall promptly notify the person that certified the document as a trade secret. The notice shall inform such person that he or she or his or her company has 30 days following receipt of such notice to file an action in circuit court seeking a determination whether the document in question contains trade secrets and an order barring public disclosure of the document. If that person or company files an action within 30 days after receipt of notice of the public records request, the office or department may not release the documents pending the outcome of the legal action. The failure to file an action within 30 days constitutes a waiver of any claim of confidentiality, and the office or department shall release the document as requested.

(3) The office or department may disclose a trade secret, together with the claim that it is a trade secret, to an officer or employee of another governmental agency whose use of the trade secret is within the scope of his or her employment.

§624.422 FS | Service of Process; Appointment of Chief Financial Officer as Process Agent

(1) Each licensed insurer, whether domestic, foreign, or alien, shall be deemed to have appointed the Chief Financial Officer and her or his successors in office as its agent to receive service of all legal process issued against it in any civil action or proceeding in this state; and process so served shall be valid and binding upon the insurer.

(2) Before its authorization to transact insurance in this state, each insurer shall file with the department designation of the name and e-mail address of the person to whom process against it served upon the Chief Financial Officer is to be made available through the department’s secure online portal. Each insurer shall also file with the department designation of the name and e-mail address of the person to whom the department shall forward civil remedy notices filed under s. 624.155. The insurer may change a designation at any time by a new filing.

(3) Service of process submitted through the department’s secure online portal upon the Chief Financial Officer as the insurer’s agent pursuant to such an appointment shall be the sole method of service of process upon an authorized domestic, foreign, or alien insurer in this state.

§624.423 FS | Serving Process

(1) Service of process upon the Chief Financial Officer as process agent of the insurer under s. 624.422 and s. 626.937 shall be made electronically as provided in s. 48.151(3). Upon receiving such service, the Chief Financial Officer shall retain a record of the process and promptly notify and make the process available through the department’s secure online portal, as provided under s. 624.307(9), to the person last designated by the insurer to receive the same, as provided under s. 624.422(2). For purposes of this section, records shall be retained electronically.

(2) If process is served upon the Chief Financial Officer as an insurer’s process agent, the insurer is not required to answer or plead except within 20 days after the date upon which the Chief Financial Officer sends or makes available by other verifiable means a copy of the process served upon her or him as required by subsection (1).

(3) Process served upon the Chief Financial Officer and sent or made available in accordance with this section and s. 624.307(9) shall for all purposes constitute valid and binding service thereof upon the insurer.

§624.424 FS | Annual Statement and Other Information

(1)

(a) Each authorized insurer shall file with the office full and true statements of its financial condition, transactions, and affairs. An annual statement covering the preceding calendar year shall be filed on or before March 1, and quarterly statements covering the periods ending on March 31, June 30, and September 30 shall be filed within 45 days after each such date. The office may, for good cause, grant an extension of time for filing an annual or quarterly statement. The statements must contain information generally included in insurers’ financial statements prepared in accordance with generally accepted insurance accounting principles and practices and in a form generally used by insurers for financial statements, sworn to by at least two executive officers of the insurer or, if a reciprocal insurer, by oath of the attorney in fact or its like officer if a corporation. To facilitate uniformity in financial statements and to facilitate office analysis, the commission may by rule adopt the form and instructions for financial statements approved by the NAIC in 2014, and subsequent amendments thereto if the methodology remains substantially consistent, and may by rule require each insurer to submit to the office, or such organization as the office may designate, all or part of the information contained in the financial statement in a computer-readable form compatible with the electronic data processing system specified by the office.

(b) Each insurer’s annual statement must contain:

1. A statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries or by a qualified loss reserve specialist, pursuant to criteria established by rule of the commission. In adopting the rule, the commission shall consider any criteria established by the NAIC. The office may require semiannual updates of the annual statement of opinion for a particular insurer if the office has reasonable cause to believe that such reserves are understated to the extent of materially misstating the financial position of the insurer. Workpapers in support of the statement of opinion must be provided to the office upon request. This paragraph does not apply to life insurance, health insurance, or title insurance.

2. An actuarial opinion summary written by the insurer’s appointed actuary. The summary must be filed in accordance with the appropriate NAIC property and casualty annual statement instructions. Proprietary business information contained in the summary is confidential and exempt under s. 624.4212, and the summary and related information are not subject to subpoena or discovery directly from the office. Neither the office nor any person who received documents, materials, or other information while acting under the authority of the office, or with whom such information is shared pursuant to s. 624.4212, may testify in a private civil action concerning such confidential information. However, the department or office may use the confidential and exempt information in the furtherance of any regulatory or legal action brought against an insurer as a part of the official duties of the department or office. No waiver of any other applicable claim of confidentiality or privilege may occur as a result of a disclosure to the office under this section or any other section of the insurance code. This paragraph does not apply to life and health insurers subject to s. 625.121(3) before the operative date of the valuation manual as defined in s. 625.1212(2), and does not apply to life and health insurers subject to s. 625.1212(4) on or after such operative date.

(c) The commission may by rule require reports or filings required under the insurance code to be submitted by electronic means in a computer-readable form compatible with the electronic data processing equipment specified by the commission.

(2) The statement of an alien insurer shall be verified by the insurer’s United States manager or other officer duly authorized. It shall be a separate statement, to be known as its general statement, of its transactions, assets, and affairs within the United States unless the office requires otherwise. If the office requires a statement as to the insurer’s affairs elsewhere, the insurer shall file such statement with the office as soon as reasonably possible.

(3) Each insurer having a deposit as required under s. 624.411 shall file with the office annually with its annual statement a certificate to the effect that the assets so deposited have a market value equal to or in excess of the amount of deposit so required.

(4) At the time of filing, the insurer shall pay the fee for filing its annual statement in the amount specified in s. 624.501.

(5) The office may refuse to continue, or may suspend or revoke, the certificate of authority of an insurer failing to file its annual or quarterly statements and accompanying certificates when due.

(6) In addition to information called for and furnished in connection with its annual or quarterly statements, an insurer shall furnish to the office as soon as reasonably possible such information as to its transactions or affairs as the office may from time to time request in writing. All such information furnished pursuant to the office’s request shall be verified by the oath of two executive officers of the insurer or, if a reciprocal insurer, by the oath of the attorney in fact or its like officers if a corporation.

(7) The signatures of all such persons when written on annual or quarterly statements or other reports required by this section shall be presumed to have been so written by authority of the person whose signature is affixed thereon. The affixing of any signature by anyone other than the purported signer constitutes a felony of the second degree, punishable as provided in s. 775.082, s. 775.083, or s. 775.084.

(8)

(a) All authorized insurers must have conducted an annual audit by an independent certified public accountant and must file an audited financial report with the office on or before June 1 for the preceding year ending December 31. The office may require an insurer to file an audited financial report earlier than June 1 upon 90 days’ advance notice to the insurer. The office may immediately suspend an insurer’s certificate of authority by order if an insurer’s failure to file required reports, financial statements, or information required by this subsection or rule adopted pursuant thereto creates a significant uncertainty as to the insurer’s continuing eligibility for a certificate of authority.

(b) Any authorized insurer otherwise subject to this section having direct premiums written in this state of less than $1 million in any calendar year and fewer than 1,000 policyholders or certificateholders of directly written policies nationwide at the end of such calendar year is exempt from this section for such year unless the office makes a specific finding that compliance is necessary in order for the office to carry out its statutory responsibilities. However, any insurer having assumed premiums pursuant to contracts or treaties or reinsurance of $1 million or more is not exempt. Any insurer subject to an exemption must submit by March 1 following the year to which the exemption applies an affidavit sworn to by a responsible officer of the insurer specifying the amount of direct premiums written in this state and number of policyholders or certificateholders.

(c) The board of directors of an insurer shall hire the certified public accountant that prepares the audit required by this subsection and the board shall establish an audit committee of three or more directors of the insurer or an affiliated company. The audit committee shall be responsible for discussing audit findings and interacting with the certified public accountant with regard to her or his findings. The audit committee shall be comprised of members who are free from any relationship that, in the opinion of its board of directors, would interfere with the exercise of independent judgment as a committee member. The audit committee shall report to the board any findings of adverse financial conditions or significant deficiencies in internal controls that have been noted by the accountant. The insurer may request the office to waive this requirement of the audit committee membership based upon unusual hardship to the insurer.

(d) Upon creation of the continuing education required under this paragraph, the certified public accountant ¹who prepares the audit must be licensed to practice pursuant to chapter 473 and must have completed at least 4 hours of insurance-related continuing education during each 2-year continuing education cycle. An insurer may not use the same accountant or partner of an accounting firm responsible for preparing the report required by this subsection for more than 5 consecutive years. Following this period, the insurer may not use such accountant or partner for a period of 5 years, but may use another accountant or partner of the same firm. An insurer may request the office to waive this prohibition based upon an unusual hardship to the insurer and a determination that the accountant is exercising independent judgment that is not unduly influenced by the insurer considering such factors as the number of partners, expertise of the partners or the number of insurance clients of the accounting firm; the premium volume of the insurer; and the number of jurisdictions in which the insurer transacts business.

(e) The commission shall adopt rules to administer this subsection which must be in substantial conformity with the 2006 Annual Financial Reporting Model Regulation adopted by the NAIC or subsequent amendments, except where inconsistent with the requirements of this subsection. Any exception to, waiver of, or interpretation of accounting requirements of the commission must be in writing and signed by an authorized representative of the office. An insurer may not raise an exception to, waiver of, or interpretation of accounting requirements as a defense in an action, unless previously issued in writing by an authorized representative of the office.

(9)

(a) Each authorized insurer shall, pursuant to s. 409.910(20), provide records and information to the Agency for Health Care Administration to identify potential insurance coverage for claims filed with that agency and its fiscal agents for payment of medical services under the Medicaid program.

(b) Each authorized insurer shall, pursuant to s. 409.2561(5)(c), notify the Medicaid agency of a cancellation or discontinuance of a policy within 30 days if the insurer received notification from the Medicaid agency to do so.

(c) Any information provided by an insurer under this subsection does not violate any right of confidentiality or contract that the insurer may have with covered persons. The insurer is immune from any liability that it may otherwise incur through its release of such information to the Agency for Health Care Administration.

(10)

(a) By January 1, 2025, and each month thereafter, each insurer or insurer group doing business in this state shall file on a monthly basis a supplemental report on an individual and group basis on a form prescribed by the commission with information on personal lines and commercial lines residential property insurance policies in this state. The supplemental report must include separate information for personal lines property policies and for commercial lines property policies and totals for each item specified, including premiums written for each of the property lines of business as described in ss. 215.555(2)(c) and 627.351(6)(a). The report must include the following information for each zip code:

1. Total number of policies in force at the end of each month.

2. Total number of policies canceled.

3. Total number of policies nonrenewed.

4. Number of policies canceled due to hurricane risk.

5. Number of policies nonrenewed due to hurricane risk.

6. Number of new policies written.

7. Total dollar value of structure exposure under policies that include wind coverage.

8. Number of policies that exclude wind coverage.

9. Number of claims open each month.

10. Number of claims closed each month.

11. Number of claims pending each month.

12. Number of claims in which either the insurer or insured invoked any form of alternative dispute resolution, and specifying which form of alternative dispute resolution was used.

(b) The office shall aggregate on a statewide basis the data submitted by each insurer or insurer group under paragraph (a) and make such data publicly available by publishing such data on the office’s website within 1 month after each quarterly and annual filing. Such information, when aggregated on a statewide basis as to an individual insurer or insurer group, is not a trade secret as defined in s. 688.002(4) or s. 812.081 and is not subject to the public records exemption for trade secrets provided in s. 119.0715.

(11) Beginning January 1, 2022, each authorized insurer or insurer group issuing personal lines or commercial lines residential property insurance policies in this state shall file with the office on an annual basis in conjunction with the statements required by paragraph (1)(a) a supplemental report on an individual and group basis for closed claims. The report must be on a form prescribed by the commission and must include the following information for each claim closed, excluding liability only claims, within the reporting period in this state:

(a) The unique claim identification number.

(b) The type of policy.

(c) The zip code of the property where the claim occurred.

(d) The county where the claim occurred.

(e) The date of loss.

(f) The peril or type of loss, including information about:

1. The types of vendors used for mitigation, repair, or replacement; and

2. The names of vendors used, if known.

(g) The date the claim was reported to insurer.

(h) The initial date the claim was closed, including information about whether the claim was closed with or without payment.

(i) The date the claim was most recently reopened, if applicable.

(j) The date a supplemental claim was filed, if applicable.

(k) The date the claim was most recently closed, if different from the initial date the claim was closed.

(l) The name of the public adjuster on the claim, if any.

(m) The Florida Bar number and name of the attorney for the claimant, if any.

(n) The total indemnity paid by the insurer.

(o) The total loss adjustment expenses paid by the insurer.

(p) The amount paid for claimant’s attorney fees, if any.

(q) The amount paid in costs for claimant’s attorney’s expenses, including, but not limited to, expert witness fees.

(r) The contingency risk multiplier, if any, that the claimant’s attorney requested to be applied in calculating the attorney fees awarded to the claimant’s attorney.

(s) The contingency risk multiplier, if any, that a court applied in calculating the attorney fees awarded to the claimant’s attorney.

(t) Any other information deemed necessary by the commission to provide the office with the ability to track litigation and claims trends occurring in the property market.

(12) Each insurer doing business in this state which reinsures through a captive insurance company as defined in s. 628.901, but without regard to domiciliary status, shall, in conjunction with the annual financial statement required under paragraph (1)(a), file a report with the office containing financial information specific to reinsurance assumed by each captive.

(a) The report shall be filed as a separate schedule designed to avoid duplication of disclosures required by the NAIC’s annual statement and instructions.

(b) Insurers must:

1. Identify the products ceded to the captive and whether the products are subject to rule 69O-164.020, Florida Administrative Code, the NAIC Valuation of Life Insurance Policies Regulation (Model #830), or the NAIC Actuarial Guideline XXXVIII (AG 38).

2. Disclose the assets of the captive in the format prescribed in the NAIC annual statement schedules.

3. Include a stand-alone actuarial opinion or certification identifying the differences between the assets the ceding company would be required to hold and the assets held by the captive.

(13) Each insurer doing business in this state which pays a fee, commission, or other financial consideration or payment to any affiliate directly or indirectly is required upon request to provide to the office any information the office deems necessary. The fee, commission, or other financial consideration or payment to any affiliate must be fair and reasonable. In determining whether the fee, commission, or other financial consideration or payment is fair and reasonable, the office shall consider, among other things, the actual cost of the service being provided.

Notes

The word “who” was substituted for the word “that” by the editors to conform to context.

§624.4241 FS | NAIC Filing Requirements

(1) Each domestic, foreign, and alien insurer who is authorized to transact insurance in this state shall file one extra copy of its annual statement convention blank, along with such additional filings as prescribed by the commission for the preceding year. Such extra copy shall be for the explicit purpose of allowing the office to forward it to the National Association of Insurance Commissioners.

(2) Coincident with the filing of the documents required in subsection (1), each insurer shall pay to the office a reasonable fee to cover the costs associated with the filing and analysis of the documents by the National Association of Insurance Commissioners and the office.

(3) The provisions of this section shall not apply to any foreign, domestic, or alien insurer which has filed such documents directly with the National Association of Insurance Commissioners if the National Association of Insurance Commissioners has certified receipt of the required documents to the office.

§624.4243 FS | Reporting of Premium Growth

(1) Each insurer that has been authorized to transact property and casualty insurance in this state for a continuous period of less than 3 years shall monthly calculate its premium growth as follows:

(a) For the 12-month period ending on the last day of the previous month, obtain the amount of the insurer’s direct and assumed written premiums for the United States and its territories.

(b) For the 12-month period immediately preceding the 12-month period specified in paragraph (a), obtain the amount of the insurer’s direct and assumed written premiums for the United States and its territories.

(c) Subtract the amount of premiums calculated under paragraph (b) from the amount of premiums calculated under paragraph (a).

(d) Divide the amount of premiums determined under paragraph (c) by the amount of premiums determined under paragraph (b).

(2) Until an insurer has held a certificate of authority in this state for 24 months, the insurer shall, instead of making the calculations required under subsection (1), report to the office no later than the last day of each month the insurer’s direct and assumed written premiums from the United States and its territories for the previous month.

(3) If the amount of the premium growth calculated by an insurer under this section exceeds 33 percent, the insurer shall, within 30 days after the end of the 12-month period ending on the last day of the previous month, file with the office a statement of the premium growth calculations under this section. The commission shall adopt rules specifying the form for the report. In response to a report under this section, the office may require the insurer to submit an explanation of the insurer’s pattern of premium growth.

(4) For the purposes of this section, direct and assumed written premiums shall be calculated in the same manner as for the preparation of the insurer’s annual statement under s. 624.424.

§624.4245 FS | Change in Controlling Interest of Foreign or Alien Insurer; Report Required

In the event of a change in the controlling capital stock or a change of 50 percent or more of the assets of a foreign or alien insurer, such insurer shall report such change in writing to the office within 30 days of the effective date thereof. The report shall contain the name and address of the new owner or owners of the controlling stock or assets, the nature and value of the new assets, and such other relevant information as the commission or office may reasonably require. For the purposes of this section, the term “controlling capital stock” means a sufficient number of shares of the issued and outstanding capital stock of such insurer or person so as to give the owner thereof power to exercise a controlling influence over the management or policies of such insurer or person.

§624.425 FS | Agent Countersignature Required, Property, Casualty, Surety Insurance

(1) Except as stated in s. 624.426, no authorized property, casualty, or surety insurer shall assume direct liability as to a subject of insurance resident, located, or to be performed in this state unless the policy or contract of insurance is issued by or through, and is countersigned by, an agent who is regularly commissioned and licensed currently as an agent and appointed as an agent for the insurer under this code. If two or more authorized insurers issue a single policy of insurance against legal liability for loss or damage to person or property caused by the nuclear energy hazard, or a single policy insuring against loss or damage to property by radioactive contamination, whether or not also insuring against one or more other perils proper to insure against in this state, such policy if otherwise lawful may be countersigned on behalf of all of the insurers by a licensed and appointed agent of any insurer appearing thereon. The producing agent shall receive on each policy or contract the full and usual commission allowed and paid by the insurer to its agents on business written or transacted by them for the insurer.

(2) If any subject of insurance referred to in subsection (1) is insured under a policy, or contract, or certificate of renewal or continuation thereof, issued in another state and covering also property and risks outside this state, a certificate evidencing such insurance as to subjects located, resident, or to be performed in this state, shall be issued by or through and shall be countersigned by the insurer’s commissioned and appointed producing agent.

(3) An agent shall not sign or countersign in blank any policy to be issued outside her or his office, or countersign in blank any countersignature endorsement therefor, or certificate issued thereunder. An agent may give a written power of attorney to the issuing insurance company to countersign such documents by imprinting her or his name, or the name of the agency or other entity with which the agent may be sharing commission pursuant to s. 626.753(1)(a) and (2), thereon in lieu of manually countersigning such documents; but an agent shall not give a power of attorney to any other person to countersign any such document in her or his name unless the person so authorized is directly employed by the agent and by no other person, and is so employed in the office of the agent.

(4) This section shall not be deemed to prohibit insurers from using salaried licensed and appointed agents for the production and servicing of business in this state and the issuance and countersignature by such agents of insurance policies or contracts, when required under subsection (1), and without payment of commission therefor.

(5) This section shall not be deemed to prohibit an insurer from authorizing an agent who is not regularly commissioned and appointed currently as an agent of the insurer from countersigning a policy or contract of insurance issued pursuant to the provisions of ss. 627.311 and 627.351. This section does not apply to reissuance of insurance policies or endorsements thereto which are part of a mass reissuance of such policies or endorsements and do not involve a change of premium or payment of agent’s commissions.

(6) The absence of a countersignature required under this section does not affect the validity of a policy or contract of insurance.

§624.426 FS | Exceptions to Countersignature Law

Section 624.425 does not apply to:

(1) Contracts of reinsurance.

(2) Policies of insurance on the rolling stock of railroad companies doing a general freight and passenger business.

(3) United States Customs surety bonds that are issued by a corporate surety approved by the United States Department of Treasury and that name the United States as the beneficiary.

(4) Policies of insurance issued by insurers whose agents represent only one company or group of companies under common ownership if a company within one group is transferring policies to another company within the same group and the agent of record remains the same.

(5) Policies of insurance issued by insurers whose agents represent, as to property, casualty, and surety insurance, only one company or group of companies under common ownership and for which the application has been lawfully submitted to the insurer.

§624.428 FS | Licensed Agent Law, Life and Health Insurances

(1) No insurer shall deliver or issue for delivery in this state any policy of life insurance, master group life insurance contract, master credit life policy or agreement, annuity contract, or contract or policy of health insurance, unless the application for such policy or contract is taken by, and the delivery of such policy or contract is made through, a resident or nonresident insurance agent of the insurer duly licensed and appointed under the law of this state, who shall receive the usual commission due to an agent from such insurer.

(2) Each such insurer shall maintain a licensed and appointed resident or nonresident agent at all times for the purpose of and through whom policies or contracts issued or delivered in this state shall be serviced.

(3) This section does not apply to policies of insurance or annuity contracts on nonresidents which are applied for outside, and delivered in, the state or to reissuance of insurance policies or endorsements thereto which are part of a mass reissuance of such policies or endorsements and do not involve a change of premium or payment of agent’s commissions.

§624.430 FS | Withdrawal of Insurer or Discontinuance of Writing Certain Kinds or Lines of Insurance

(1) Any insurer desiring to surrender its certificate of authority, withdraw from this state, or discontinue the writing of any one or multiple kinds or lines of insurance in this state shall give 90 days’ notice in writing to the office setting forth its reasons for such action. Any insurer who does not write any premiums in a kind or line of insurance within a calendar year shall have that kind or line of insurance removed from its certificate of authority; however, such line of insurance shall be restored to the insurer’s certificate upon the insurer demonstrating that it has available the expertise necessary and meets the other requirements of this code to write that line of insurance.

(2) If the office determines, based upon its review of the notice and other required information, that the plan of an insurer withdrawing from this state makes adequate provision for the satisfaction of the insurer’s obligations and is not hazardous to policyholders or the public, the office shall approve the surrender of the insurer’s certificate of authority. The office shall, within 45 days from receipt of a complete notice and all required or requested additional information, approve, disapprove, or approve with conditions the plan submitted by the insurer. Failure to timely take action with respect to the notice shall be deemed an approval of the surrender of the certificate of authority.

(3) Upon office approval of the surrender of the certificate of authority of a domestic property and casualty insurer that is a corporation, the insurer may initiate the dissolution of the corporation in accordance with the applicable provisions of part I of chapter 607.

(4) Any insurer withdrawing from this state or discontinuing the writing of all kinds of insurance in this state shall surrender its certificate of authority.

(5) This section does not apply to life insurance and corresponding lines of insurance as long as the insurer has in force life insurance policies and corresponding lines in this state.

(6) This section does not apply to insurers during the calendar year in which they first receive their certificate of authority.

(7) This section does not apply to insurers who have discontinued writing in accordance with an order issued by the office.

(8) Notwithstanding subsection (7), any insurer desiring to surrender its certificate of authority, withdraw from this state, or discontinue the writing of any one or multiple kinds or lines of insurance in this state is expected to have availed itself of all reasonably available reinsurance. Reasonably available reinsurance shall include unrealized reinsurance, which is defined as reinsurance recoverable on known losses incurred and due under valid reinsurance contracts that have not been identified in the normal course of business and have not been reported in financial statements filed with the Office of Insurance Regulation. Within 90 days after surrendering its certificate of authority, withdrawing from this state, or discontinuing the writing of any one or multiple kinds or lines of insurance in this state, the insurer shall certify to the Director of the Office of Insurance Regulation that the insurer has engaged an independent third party to search for unrealized reinsurance, and that the insurer has made all relevant books and records available to such third party. The compensation to such third party may be a percentage of unrealized reinsurance identified and collected.

(9) The commission may adopt rules to administer this section.

§624.4301 FS | Notice of Temporary Discontinuance of Writing New Residential Property Insurance Policies

(1) Any authorized insurer, before temporarily suspending writing new residential property insurance policies in this state, must give notice to the office of the insurer’s reasons for such action, the effective dates of the temporary suspension, and the proposed communication to its agents. Such notice must be provided on a form approved by the office and adopted by the commission. The insurer shall submit such notice to the office the earlier of 20 business days before the effective date of the temporary suspension of writing or 5 business days before notifying its agents of the temporary suspension of writing. The insurer must provide any other information requested by the office related to the insurer’s temporary suspension of writing. The requirements of this section do not:

(a) Apply to a temporary suspension of writing new business made in response to:

1. A hurricane that may make landfall in this state if such temporary suspension ceases within 72 hours after hurricane conditions are no longer present in this state; or

2. Any other natural emergency as defined in s. 252.34(8) which impacts one or more counties and is the subject of a declared state of emergency by any local, state, or federal authority, if such temporary suspension applies only to the affected counties and ceases within 72 hours after such natural emergency is no longer present in those counties.

(b) Require such insurers to obtain the approval of the office before temporarily suspending writing new residential property insurance policies in this state.

(2) The commission may adopt rules to administer this section.

§624.4305 FS | Nonrenewal of Residential Property Insurance Policies

Any insurer planning to nonrenew more than 10,000 residential property insurance policies in this state within a 12-month period shall give notice in writing to the Office of Insurance Regulation for informational purposes 90 days before the issuance of any notices of nonrenewal. The notice provided to the office must set forth the insurer’s reasons for such action, the effective dates of nonrenewal, and any arrangements made for other insurers to offer coverage to affected policyholders. The commission may adopt rules to administer this section.

§624.4315 FS | Workers’ Compensation Insurers; Notice of Significant Underwriting Change

Each workers’ compensation insurer shall notify the office in writing or by electronic means of a significant underwriting change that materially limits or restricts the number of workers’ compensation policies or premiums written in this state. The commission may adopt rules to administer this requirement.

§624.436 FS | Florida Nonprofit Multiple-Employer Welfare Arrangement Act

Sections 624.436-624.446 may be cited as the “Florida Nonprofit Multiple-Employer Welfare Arrangement Act.”

§624.4361 FS | Definitions

As used in ss. 624.436-624.446:

(1) “Arrangement” means a multiple-employer welfare arrangement.

(2) “Fund balance” means total statutory assets in excess of total statutory liabilities, except that assets pledged to secure debts not reflected on the books of the multiple-employer welfare arrangement shall not be included in the fund balance. “Fund balance” includes other contributed capital, retained earnings, and surplus notes.

(3) “Insolvent” or “insolvency” means that all the assets of the multiple-employer welfare arrangement, if made immediately available, would not be sufficient to discharge all of its liabilities, or that the multiple-employer welfare arrangement is unable to pay its debts as they become due in the usual course of business.

(4) “Reporting period” means the annual accounting period or fiscal year of the multiple-employer welfare arrangement.

(5) “Statutory accounting principles” means generally accepted accounting principles, except as modified by part I of chapter 625 and by rules adopted by the commission which recognize the difference between an arrangement and an insurer.

(6) “Surplus notes” means funds borrowed by a multiple-employer welfare arrangement which result in a written instrument which includes all of the following:

(a) The effective date, amount, interest, and parties involved are clearly set forth.

(b) The principal sum and any interest accrued thereon are subject to and subordinate to all other liabilities of the multiple-employer welfare arrangement.

(c) The instrument states that the parties agree that the multiple-employer welfare arrangement shall satisfy the office that all claims of participants and general creditors of the organization have been paid or otherwise discharged prior to any payment of interest or repayment of principal.

(d) The instrument is executed by both parties and a certified copy of the instrument is filed with the office.

(e) The parties agree not to modify, terminate, or cancel the surplus note without the prior approval of the office.

(7) “Qualified actuary” means an actuary who is a member of the American Academy of Actuaries or the Society of Actuaries and has experience in establishing rates for a self-insured trust and the health services being provided.

§624.437 FS | Multiple-Employer Welfare Arrangement Defined; Certificate of Authority Required; Penalty

(1) For the purposes of ss. 624.436-624.446, the term “multiple-employer welfare arrangement” means an employee welfare benefit plan or any other arrangement which is established or maintained for the purpose of offering or providing health insurance benefits or any other benefits described in s. 624.33, other than life insurance benefits, to the employees of two or more employers, or to their beneficiaries.

(2) No person shall operate, maintain, or, after October 1, 1983, establish a multiple-employer welfare arrangement unless such arrangement has a valid certificate of authority issued by the office.

(3) This section does not apply to a multiple-employer welfare arrangement which offers or provides benefits which are fully insured by an authorized insurer, to an arrangement which is exempt from state insurance regulation in accordance with Pub. L. No. 93-406, the Employee Retirement Income Security Act, or to the state group health insurance program administered pursuant to s. 110.123.

(4)

(a) Any person failing to hold a subsisting certificate of authority from the office while operating or maintaining a multiple-employer welfare arrangement shall be subject to a fine of not less than $5,000 or more than $100,000 for each violation.

(b) Any person who operates or maintains a multiple-employer welfare arrangement without a subsisting certificate of authority from the office shall be subject to the cease and desist penalty powers of the office as set forth in ss. 626.9571, 626.9581, 626.9591, and 626.9601.

(c)

1. Any person who operates or maintains a multiple-employer welfare arrangement without a subsisting certificate of authority as required under this section commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083.

2. Except as provided in subparagraph 1., any person who violates the provisions of ss. 624.437-624.446 commits a misdemeanor of the first degree, punishable as provided in s. 775.082 or s. 775.083.

(d) In addition to the penalties and other enforcement provisions of the Florida Insurance Code, the office is vested with the power to seek both temporary and permanent injunctive relief when:

1. A multiple-employer welfare arrangement is being operated by any person or entity without a subsisting certificate of authority.

2. Any person, entity, or multiple-employer welfare arrangement has engaged in any activity prohibited by the Florida Insurance Code or by any rule adopted pursuant thereto.

3. Any multiple-employer welfare arrangement, person, or entity is renewing, issuing, or delivering a policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided to employees or employee family members without a subsisting certificate of authority.

The office’s authority to seek injunctive relief shall not be conditioned on having conducted any proceeding pursuant to chapter 120. The authority vested in the office by virtue of the operation of this section shall not act to reduce any other enforcement remedy or power to seek injunctive relief that may otherwise be available to the office.

§624.438 FS | General Eligibility

(1) To meet the requirements for issuance of a certificate of authority and to maintain a multiple-employer welfare arrangement, an arrangement:

(a) Must be nonprofit.

(b) Must be established by a trade association, industry association, professional association of employers or professionals, or a bona fide group that has a constitution or bylaws specifically stating its purpose and that has been organized for purposes in addition to obtaining or providing insurance.

1. A trade association consists of employer members who are in the same trade as recognized by the appropriate licensing agency.

2. An industry association consists of employer members who are in the same major group code, as defined by the Standard Industrial Classification Manual issued by the federal Office of Management and Budget, unless restricted by subparagraph 1. or subparagraph 3.

3. A professional association consists of employer members who are of the same profession as recognized by the appropriate licensing agency.

4. A bona fide group is a group or association of employers which meets the following requirements:

a. The primary purpose of the group or association may be to offer and provide health coverage to its employer members and their employees. However, the group or association must also have at least one substantial business purpose unrelated to such primary purpose. For purposes of this sub-subparagraph, a substantial business purpose is deemed to exist if the group or association would be a viable entity in the absence of sponsoring an employee benefit plan. A substantial business purpose includes promoting common business interests in a given trade or employer community and is not required to be a for-profit activity.

b. Each employer member of the group or association which participates in the group health plan is a person acting directly as an employer of at least one employee who is a participant covered under the plan.

c. The group or association has a formal organizational structure with a governing body and has bylaws or other similar indications of formality.

d. The functions and activities of the group or association are controlled by its employer members, and the group’s or association’s employer members that participate in the group health plan control the plan. Control must be present both in form and in substance.

e. The employer members have a principal place of business in the same region that does not exceed the boundaries of a single state or metropolitan area, even if the metropolitan area includes more than one state.

f. The group or association does not make health coverage through the group’s or association’s group health plan available to any person other than:

(I) An employee of a current employer member of the group or association;

(II) A former employee of a current employer member of the group or association who became eligible for coverage under the group health plan when the former employee was an employee of the employer; or

(III) A beneficiary, such as a spouse or dependent child, of an individual described in sub-sub-subparagraph (I) or sub-sub-subparagraph (II).

g. The group or association and the health coverage offered by the group or association comply with the nondiscrimination provisions of s. 627.6699.

h. The group or association is not a health insurance issuer as defined in s. 733(b)(2) of the Employee Retirement Income Security Act of 1974, 29 U.S.C. s. 1191b(b)(2), or owned or controlled by such a health insurance issuer or by a subsidiary or affiliate of such a health insurance issuer, other than to the extent such entities participate in the group or association in their capacity as employer members of the group or association.

The requirements of this paragraph do not apply to an arrangement licensed before April 1, 1995, regardless of the nature of its business. However, an arrangement exempt from the requirements of this paragraph may not expand the nature of its business beyond that set forth in the articles of incorporation of its sponsoring association as of April 1, 1995, except as authorized in this paragraph.

(c) Must be operated pursuant to a trust agreement by a board of trustees which shall have complete fiscal control over the arrangement and which shall be responsible for all operations of the arrangement. The trustees selected shall be owners, partners, officers, directors, or employees of one or more employers in the arrangement. A trustee may not be an owner, officer, or employee of the administrator or service company of the arrangement. The trustees shall have the authority to approve applications of association members for participation in the arrangement and to contract with an authorized administrator or service company to administer the day-to-day affairs of the arrangement.

(d) Must be neither offered nor advertised to the public generally.

(e) Must be offered only to eligible employers who have been members of the sponsoring association for at least 2 consecutive months. The requirements of this paragraph shall not apply to an arrangement that has been operating under a certificate for at least 3 years.

(f) Must be operated in accordance with sound actuarial principles.

(g) May, notwithstanding the provisions of paragraph (e), be offered to eligible physician employers. An eligible physician employer may participate in an arrangement’s employer health benefit plans without being a member of the arrangement’s sponsoring association if:

1. The physician has more than one employee.

2. The physician employer enters into a contract to render medical services to the arrangement’s plan participants.

3. The physician employer agrees to waive any fee due from the arrangement in the event that the arrangement becomes insolvent.

4. The physician employer agrees to be subject to the same assessments and surcharges as apply to arrangement members.

(2) The arrangement shall issue to each covered employee a policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided. This evidence of the benefits and coverages provided shall contain in boldfaced print and in at least 12-point type in a conspicuous location, the following statement:

“The benefits and coverages described herein are provided through a trust fund established and funded by a group of employers. It is not an insurance company and it is not protected by a guaranty fund in the event of insolvency. Participating employers are assessable for any losses incurred by the trust.”

(3) Each arrangement shall maintain specific excess insurance with a retention level determined in accordance with s. 624.439(6) and sound actuarial principles.

(4) Each arrangement shall establish and maintain appropriate loss reserves determined in accordance with sound actuarial principles.

(5) The office shall not grant or continue a certificate of authority for any arrangement if the office determines any trustee, manager, or administrator to be incompetent, untrustworthy, or so lacking in insurance expertise as to make the operations of the arrangement hazardous to potential and existing insureds; that any trustee, manager, or administrator has been found guilty of, or has pled guilty or no contest to a felony, a crime involving moral turpitude, or a crime punishable by imprisonment of 1 year or more under the law of any state, territory, or country, whether or not a judgment or conviction has been entered; that any trustee, manager, or administrator has had any type of insurance license revoked in this or any other state; or that the business operations of the arrangement are or have been marked, to the detriment of the employers participating in the arrangement, of persons receiving benefits from the arrangement, or of creditors or the public, by the improper manipulation of assets, accounts, or specific excess insurance or by bad faith.

(6) To qualify for and retain approval to transact business, an arrangement shall make all contracts with administrators or service companies available for inspection by the office initially, and annually thereafter upon reasonable notice.

(7) Failure to maintain compliance with the eligibility requirements established by this section and the filing requirements of ss. 624.33(1) and 624.439 shall be grounds for suspension or revocation of the certificate of authority of an arrangement.

§624.4385 FS | Certain Words Prohibited in Name of Organization

No entity holding a certificate as a multiple-employer welfare arrangement other than a licensed insurer may use in its name, contracts, or literature the term “insurance,” “casualty,” “surety,” or “mutual,” or any other words descriptive of the insurance, casualty, or surety business or deceptively similar to the name or description of any insurance or surety company doing business in the state.

§624.439 FS | Filing of Application

The sponsoring association shall file with the office an application for a certificate of authority upon a form to be adopted by the commission and furnished by the office, signed under oath by officers of the trust, which shall include or have attached the following:

(1) A copy of the articles of incorporation, constitution, and bylaws of the association, if any.

(2) A list of the names, addresses, and official capacities within the arrangement of the individuals who are to be responsible for the management of and the conduct of the affairs of the arrangement, including all trustees, officers, and directors. Such individuals shall fully disclose to the office the extent and nature of any contracts or arrangements between themselves and the arrangement, including any possible conflicts of interest.

(3) A copy of the articles of incorporation, bylaws, or trust agreement which governs the operation of the arrangement.

(4) A copy of the policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided to covered employees, which shall be in accordance with s. 627.651(4), and which shall include a table of the rates charged, or proposed to be charged, for each form of such contract. A qualified actuary shall certify that:

(a) The rates are not inadequate.

(b) The rates are appropriate for the class of risks for which they have been computed.

(c) An adequate description of the rating methodology has been filed with the office and such methodology follows consistent and equitable actuarial principles.

(5) A copy of the fidelity bond in an amount equal to not less than 10 percent of the funds handled annually and issued in the name of the arrangement covering its trustees, directors, officers, employees, administrator, or other individuals managing or handling the funds or assets of the arrangement. In no case may such bond be less than $50,000 or more than $500,000, except that the office, after due notice to all interested parties and opportunity for hearing, and after consideration of the record, may prescribe an amount in excess of $500,000, subject to the 10-percent limitation of the preceding sentence.

(6)

(a) A copy of the arrangement’s excess insurance agreement, which shall provide that the net retention level for any one risk shall not exceed $50,000, and which shall otherwise be in accordance with sound actuarial principles.

(b) The office may waive or modify the maximum net retention requirement if:

1. The excess insurance is not available for a reasonable cost; or

2. The arrangement:

a. Has 150 percent of the statutory reserve requirement as specified in s. 624.441;

b. Has a fund balance in excess of that required by statute; and

c. Has a ratio of current assets to current liabilities of at least 2.0 to 1.0.

(7)

(a) A feasibility study, done by an independent qualified actuary and an independent certified public accountant, determined by the office to satisfactorily address market potential, market penetration, market competition, operating expenses, gross revenues, net income, total assets and liabilities, cash flow, and such other items as the office or commission reasonably requires. The study shall be for the greater of 3 years or until the arrangement has been projected to be profitable for 12 consecutive months. The study must show that the arrangement would not, at any month-end of the projection period, have less than the minimum statutory deposit as required by s. 624.441 or have a fund balance less than the amount required by s. 624.4392.

(b) The feasibility study shall reflect and support that initial gross premiums for the first year of operation will be at least $100,000.

(8) Evidence satisfactory to the office showing that the arrangement will be operated in accordance with sound actuarial principles. The office shall not approve the arrangement unless the office determines that the plan is designed to provide sufficient revenues to pay current and future liabilities, as determined in accordance with sound actuarial principles.

(9) Confirmation of insolvency protection as required by s. 624.441.

(10) A copy of each contract between the arrangement and any administrator or service company which may be made available for review rather than filed or attached.

(11) Such additional information as the office or commission reasonably requires.

§624.4392 FS | Fund Balance

(1) Each multiple-employer welfare arrangement licensed on or after October 1, 1991, shall have a fund balance equal to $200,000 before a certificate of authority may be issued by the office. After it has received a certificate of authority, the arrangement must maintain a fund balance equal to $100,000 or 10 percent of total liabilities, whichever is greater.

(2) A multiple-employer welfare arrangement holding a certificate of authority on October 1, 1991, shall increase and maintain its fund balance as follows:

(a) As of January 1, 1992, the balance shall be equal to $75,000 or 5 percent of total liabilities, whichever is greater.

(b) As of January 1, 1993, the balance shall be equal to $100,000 or 10 percent of total liabilities, whichever is greater.

(3) The office shall order the arrangement to assess participating employers at any time the fund balance does not meet the requirements of this section.

§624.44 FS | Examination by the Office

(1)

(a) The office shall examine the affairs, transactions, accounts, business records, and assets of any multiple-employer welfare arrangement as often as it deems necessary for the protection of the people of the state, but not less frequently than once every 3 years. For the purpose of examinations, the office may administer oaths and examine the trustees, directors, officers, and agents of an arrangement concerning its business and affairs.

(b) The expenses of examination of each arrangement by the office are subject to the same terms and conditions as apply to insurers under part II.

(c) The office may contract, at reasonable fees for work performed, with qualified, impartial, outside sources to perform audits or examinations or portions thereof to determine continued compliance with the requirements of ss. 624.436-624.446. Any contracted assistance shall be under direct supervision of the office. The results of any contracted assistance shall be subject to review, approval, disapproval, or modification by the office.

(2) If the office preliminarily finds that an arrangement is insolvent, the office shall notify the arrangement of such insolvency. Upon being so notified, the arrangement shall within 15 days file with the office all information that proves that the arrangement is not insolvent.

(3) If the arrangement fails within the 15-day period provided in subsection (2) to supply information showing to the satisfaction of the office that the arrangement is not insolvent, the office may:

(a)

1. Suspend any new enrollment;

2. Suspend or revoke the arrangement’s certificate of authority; or

3. Place the arrangement in administrative supervision under ¹s. 624.80; or

(b) For the purposes of dissolution, liquidation, or rehabilitation, place the arrangement under the supervision of the department pursuant to chapter 631.

Notes

Section 624.80 defines terms applicable to part VI, dealing with administrative supervision.

§624.441 FS | Insolvency Protection

(1) To assure the faithful performance of its obligations to its employer members and covered employees and their dependents, every arrangement shall deposit with the department cash, securities of the type eligible for deposit by insurers under s. 625.52, or any combination of these, in an amount equal to 25 percent of the preceding 12 months’ health care claims expenditures or 5 percent of gross annual premiums for the succeeding year, whichever is greater, which deposit shall be made within 30 days after the close of each fiscal year; however, in no case shall the amount of the deposit exceed $500,000.

(2) All income from deposits shall belong to the depositing arrangement and shall be paid to it as it becomes available. An arrangement that has made a securities deposit may withdraw that deposit, or any part thereof, after making a substitute deposit of cash, securities, or any combination of these or other measures of equal amount and value, upon approval by the office and department. No judgment creditor or other claimant of a multiple-employer welfare association shall have the right to levy upon any of the assets or securities held in this state as a deposit under this section.

(3) Deposits of securities or cash pursuant to this section shall be administered by the office and department in accordance with part III of chapter 625.

§624.4411 FS | Administrative, Provider, and Management Contracts

(1) The office may require a multiple-employer welfare arrangement to submit any contract for administrative services, contract with a provider other than an individual physician, contract for management services, or contract with an affiliated person to the office, if the office has reason to believe that the arrangement has entered into a contract which requires it to pay a fee which is unreasonably high in relation to the services provided. Multiple-employer welfare arrangements are prohibited from paying a fee to a sponsoring association unless such fee is directly related to services provided by the association for the arrangement.

(2) After review of a contract, the office may order the arrangement to cancel the contract in accordance with the terms of the contract and applicable law if the office determines that the fees to be paid by the arrangement under the contract are so unreasonably high in relation to the services provided that the contract is detrimental to the policyholders or certificateholders of the arrangement.

(3) All contracts for administrative services, management services, and provider services other than individual physician contracts, and all contracts with affiliated entities, entered into or renewed by an arrangement on or after October 1, 1991, shall contain a provision that the contract shall be canceled upon issuance of an order by the office pursuant to this section.

§624.4412 FS | Policy Forms

(1) No policy or contract form, application form, certificate, rider, endorsement, summary plan description, or other evidence of coverage shall be issued by an arrangement unless the form and all changes thereto have been filed with the office by or on behalf of the arrangement which proposes to use such form and have been approved by the office. Filing of all forms shall be in accordance with the provisions of s. 627.410(2).

(2) The office shall disapprove any form filed under this section, or withdraw any previous approval thereof, only if the form:

(a) Is in any respect in violation of, or does not comply with, this code;

(b) Contains or incorporates by reference, where such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract;

(c) Has any title, heading, or other indication of its provisions which is misleading;

(d) Is printed or otherwise reproduced in such manner as to render any material provision of the form substantially illegible; or

(e) Contains provisions which are unfair or inequitable, or contrary to the public policy of this state or which encourage misrepresentation.

§624.4414 FS | Employer Participants’ Liability

(1) The liability of each employer participant for the obligations of the multiple-employer welfare arrangement shall be individual, several, and proportionate, but not joint, except as provided in this section and s. 624.4415.

(2) Each employer participant shall have a contingent assessment liability pursuant to s. 624.4415 for payment of actual losses and expenses incurred while the policy was in force.

(3) Each policy issued by the arrangement shall contain a statement of the contingent liability. Both the application for insurance and policy shall contain, in contrasting color and not less than 10-point type, the following statement:

“This is a fully assessable policy. In the event the arrangement is unable to pay its obligations, policyholders (employers) will be required to contribute on a pro rata earned premium basis the money necessary to meet any unfilled obligations.”

§624.4415 FS | Assessments

(1) All multiple-employer welfare arrangements shall provide that employers are assessable in accordance with this section.

(2) Each multiple-employer welfare arrangement may assess all employers if its prior fiscal year statement of operations reflected a loss.

(3) Each multiple-employer welfare arrangement shall assess all employers if the arrangement’s fund balance at the end of any accounting period is less than the fund balance required by statute.

(4)

(a) The minimum assessment shall be the amount necessary to comply with the requirements of s. 624.4392. Each employer’s assessment shall be computed by applying the earned premium for each employer’s plan of benefits during the prior fiscal year as a percent of the amount of the total of all employers’ earned premium for the same year. Each employer’s assessment shall be that employer’s percent times the total assessment levied.

(b) In the event members fail to pay assessments, the other members shall be liable on a proportionate basis for an additional assessment.

(c) The multiple-employer welfare arrangement, acting on behalf of all members who paid the additional assessment, shall institute legal action, when necessary and appropriate, to recover the assessment from the members who fail to pay their assessment.

§624.4416 FS | Assessments by Receiver

(1) In the event of delinquency proceedings against a multiple-employer welfare arrangement, the department as receiver may assess employer participants. Any person or entity that was an employer participant in the arrangement at any time is liable for the assessments, regardless of whether or not it was a participant during the entire assessment period. The assessment period is the 12 months immediately preceding the date of the delinquency order or the period from the date of creation of the arrangement through the date of the delinquency order, whichever is shorter. Employer participants assessed under this section shall be assessed in the amounts specified by s. 624.4415.

(2) The total assessment must equal the projected amount which the department reasonably estimates to be necessary to pay all class four claims as defined in s. 631.271, whenever accrued, together with the costs and expenses of collecting the assessments, a reasonable loading factor for uncollected assessments, and the costs and expenses of the delinquency proceeding in full.

(3) To the extent not inconsistent with this section, the assessment must follow the procedure for assessments for reciprocal insurers provided in ss. 631.311, 631.321, and 631.331.

(4) No offset may be allowed against any assessment.

(5) If an arrangement, in violation of applicable laws or rules, issues coverage to a person or entity not eligible for coverage, the insured is eligible to participate in the proceeds of the assessment, and is assessable, subject to the relief provisions of s. 624.4417, if applicable.

§624.4417 FS | Certain Sales Prohibited

(1) A multiple-employer welfare arrangement may not offer, advertise, or sell insurance coverage to the general public.

(2) As used in this section, a member of the general public is a person who:

(a) Purchases insurance directly from the arrangement or an agent rather than through an employer;

(b) Makes premium payments directly to the arrangement or through an agent rather than through an employer; or

(c) Is not employed by an employer subject to assessment.

(3) A person who violates this section is jointly and severally liable for the payment of assessments on behalf of any person who is sold coverage in violation of this section. A person to whom coverage is sold in violation of this section is not subject to assessment until the department determines that the assessment is not collectible in full from the agent, trustee, officer, or other person.

(4) Any person in violation of this section commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083.

§624.442 FS | Annual Reports; Actuarial Certification; Quarterly Reports; Penalties

(1) Every arrangement shall, annually within 3 months after the end of the fiscal year or within such extension of time therefor as the office for good cause may grant, file a report with the office, on forms prescribed by the commission, verified by the oath of a member of the board of trustees and by an administrative executive appointed by the board, showing its condition on the last day of the preceding fiscal year. The report shall contain an audited financial statement of the arrangement prepared in accordance with statutory accounting principles, including its balance sheet and a statement of operations for the preceding year certified by an independent certified public accountant. The report shall also include an analysis of the adequacy of reserves and contributions or premiums charged, based on a review of past and projected claims and expenses.

(2) In addition to information called for and furnished in connection with the annual report, if reasonable grounds exist, the office may request information which summarizes paid and incurred expenses, and contributions or premiums received, and may request evidence satisfactory to the office that the arrangement is actuarially sound. Such information and evidence shall be furnished to the office by the arrangement as soon as reasonably possible after requested by the office, but not later than 30 days after such request, unless the office, for good cause, grants an extension.

(3) Annually, in conjunction with the annual report required by subsection (1), each arrangement shall submit an actuarial certification prepared by an independent actuary certifying that:

(a) The arrangement is actuarially sound. The certification shall consider the rates, benefits, and expenses of, and any other funds available for the payment of the obligations of, the arrangement.

(b) The rates being charged and to be charged for contracts are actuarially adequate through the end of the period for which rates have been guaranteed.

(c) Incurred but not reported claims and claims reported but not fully paid have been adequately provided for.

(d) Such other information relating to the performance of the arrangement as the commission or office requires.

(4) Each arrangement shall file quarterly, within 45 days after the end of each of its four quarterly reporting periods, an unaudited financial statement of the arrangement on forms prescribed by the commission, verified according to the best of their information, knowledge, and belief by the oath of a member of the board of trustees and by an administrative executive appointed by the board showing its condition on the last day of the preceding quarter.

(5) Any arrangement that fails to file an annual financial report, actuarial report, or quarterly financial report in the form and within the time required by this section shall forfeit to the office an amount set by order of the office which does not exceed $1,000 for each of the first 10 days of noncompliance and does not exceed $2,000 for each subsequent day of noncompliance. Upon notice by the office that the arrangement is not in compliance with this section, the arrangement’s authority to enroll new enrollees or to do business in this state ceases until the office determines the arrangement to be in compliance. The office may not collect more than $100,000 under this subsection with respect to any particular report.

(6) All moneys collected by the office under this section shall be deposited to the credit of the Insurance Regulatory Trust Fund.

(7) Each authorized arrangement must retain an independent certified public accountant, referred to in this subsection as “CPA,” who agrees by written contract with the arrangement to comply with ss. 624.436-624.445. The contract must state that:

(a) The CPA will provide to the arrangement audited financial statements consistent with ss. 624.436-624.445.

(b) Any determination by the CPA that the arrangement does not meet the minimum surplus requirements set forth in ss. 624.436-624.445 will be stated by the CPA, in writing, in the audited financial statement.

(c) The completed workpapers and any written communications between the CPA and the arrangement will be made available for review on a visual inspection-only basis by the office at the location of the arrangement, the office, or any other reasonable place agreeable to both the office and the arrangement.

(d) The CPA will retain for review the workpapers and written communications with the arrangement for not less than 6 years.

§624.443 FS | Place of Business; Maintenance of Records

Each arrangement shall have and maintain its principal place of business in this state and shall therein make available to the office complete records of its assets, transactions, and affairs in accordance with such methods and systems as are customary for, or suitable to, the kind or kinds of business transacted. The office may waive this requirement if an arrangement has been operating in another state for at least 25 years, has been licensed in such state for at least 10 years, and has a minimum fund balance of $25 million at the time of licensure.

§624.4431 FS | Administration; Rules

The administration of ss. 624.436-624.446 is vested in the commission and office. The commission may adopt rules pursuant to ss. 120.536(1) and 120.54 to implement the provisions of ss. 624.436-624.446.

§624.4432 FS | Assets, Liabilities, and Investments

Each arrangement that obtains or maintains a certificate of authority is subject to parts I and II of chapter 625 as they apply to domestic insurers.

§624.444 FS | Suspension, Revocation of Approval

(1) The office shall deny, suspend, or revoke an arrangement’s certificate of authority if it finds that the arrangement:

(a) Is insolvent;

(b) Is using such methods and practices in the conduct of its business as to render its further transaction of business in this state hazardous or injurious to its participating employers, covered employees and dependents, or to the public;

(c) Has failed to pay any final judgment rendered against it in this state within 60 days after the judgment became final;

(d) Is in violation of any provision of this chapter, including any requirements for the granting of a certificate of authority;

(e) Is no longer actuarially sound or the arrangement does not have the minimum surplus required by this chapter; or

(f) The existing contract rates are inadequate.

(2) The office may, in its discretion, deny, suspend, or revoke the certificate of authority of any arrangement if it finds that the arrangement:

(a) Has violated any lawful order or rule of the office or commission or any applicable provision of the Florida Insurance Code; or

(b) Has refused to be examined or to produce its accounts, records, and files for examination, or if any of its officers have refused to give information with respect to its affairs or to perform any other legal obligation as to such examination, when required by the office.

(3) Whenever the financial condition of the arrangement is such that, if not modified or corrected, its continued operation would result in impairment or insolvency, the department may order the arrangement to file with the office and implement a corrective action plan designed to do one or more of the following:

(a) Reduce the total amount of present potential liability for benefits by reinsurance or other means.

(b) Reduce the volume of new business being accepted.

(c) Reduce the expenses of the arrangement by specified methods.

(d) Suspend or limit the writing of new business for a specified period of time.

(e) Require an increase in the arrangement’s net worth.

If the arrangement fails to submit a plan within 30 days after the office’s order, or if the plan submitted is insufficient to correct the arrangement’s financial condition, the office may order the arrangement to implement one or more of the corrective actions specified in this subsection.

(4) In any order to suspend the authority of an arrangement to enroll new subscribers, the office shall specify the period during which the suspension is to be in effect and the conditions, if any, which must be met by the arrangement prior to reinstatement of its authority to enroll new subscribers. The order of suspension is subject to rescission or modification by further order of the office prior to the expiration of the suspension period. An arrangement’s authority to enroll new subscribers shall not be reinstated unless it requests reinstatement, and shall not be reinstated if the office finds that the circumstances that gave rise to the suspension still exist.

§624.445 FS | Order, Notice, Duration, Effect of Suspension or Revocation; Administrative Fine

(1) Suspension or revocation of an arrangement’s certificate of authority shall be in accordance with ss. 624.420 and 624.421.

(2) If the office finds that one or more grounds exist for the discretionary revocation or suspension of an arrangement’s certificate of authority under ss. 624.436-624.446, the office may, in lieu of or in addition to such revocation or suspension, impose a fine upon such arrangement, in accordance with s. 624.4211.

§624.446 FS | Rehabilitation, Dissolution

Any rehabilitation, liquidation, conservation, or dissolution of a multiple-employer welfare arrangement shall be conducted under the supervision of the department, which shall have all power with respect thereto granted to it under the laws governing the rehabilitation, liquidation, conservation, or dissolution of insurers.

§624.447 FS | Certificate of Insurance for Contractors

Any insurer shall, upon request, verify a certificate of insurance on any contractor, as defined in s. 768.0425.

§624.448 FS | Assets of Insurers; Reporting Requirements

(1) As used in this section, the term:

(a) “Material acquisition of assets” or “material disposition of assets” means one or more transactions occurring during any 30-day period which are nonrecurring and not in the ordinary course of business and involve more than 5 percent of the reporting insurer’s total admitted assets as reported in its most recent statutory statement filed with the insurance department of the insurer’s state of domicile.

(b) “Material nonrenewal, cancellation, or revision of a ceded reinsurance agreement” is one that affects:

1. With respect to property and casualty business, including accident and health business written by a property and casualty insurer:

a. More than 50 percent of the insurer’s total ceded written premium; or

b. More than 50 percent of the insurer’s total ceded indemnity and loss adjustment reserves.

2. With respect to life, annuity, and accident and health business, more than 50 percent of the total reserve credit taken for business ceded, on an annualized basis, as indicated in the insurer’s most recent annual statement.

3. With respect to property and casualty business or life, annuity, and accident and health business, a material revision includes:

a. The replacement of an authorized reinsurer representing more than 10 percent of a total cession by one or more unauthorized reinsurers; or

b. The reduction or waiver, with respect to one or more unauthorized insurers, of previously established collateral requirements representing more than 10 percent of a total cession.

(2) Each domestic insurer shall file a report with the office disclosing a material acquisition of assets, a material disposition of assets, or a material nonrenewal, cancellation, or revision of a ceded reinsurance agreement, unless the material acquisition or disposition of assets or the material nonrenewal, cancellation, or revision of a ceded reinsurance agreement has been submitted to the office for review, approval, or informational purposes under another section of the Florida Insurance Code or a rule adopted thereunder. A copy of the report and each exhibit or other attachment must be filed by the insurer with the National Association of Insurance Commissioners. The report required in this section is due within 15 days after the end of the calendar month in which the transaction occurs.

(3) An immaterial acquisition or disposition of assets need not be reported under this section.

(4)

(a) Acquisitions of assets which are subject to this section include each purchase, lease, exchange, merger, consolidation, succession, or other acquisition of assets. Asset acquisitions for the construction or development of real property by or for the reporting insurer and the acquisition of construction materials for this purpose are not subject to this section.

(b) Dispositions of assets which are subject to this section include each sale, lease, exchange, merger, consolidation, mortgage, hypothecation, assignment for the benefit of a creditor or otherwise, abandonment, destruction, or other disposition of assets.

(5)

(a) The following information must be disclosed in any report of a material acquisition or disposition of assets:

1. The date of the transaction;

2. The manner of acquisition or disposition;

3. The description of the assets involved;

4. The nature and amount of the consideration given or received;

5. The purpose of, or reason for, the transaction;

6. The manner by which the amount of consideration was determined;

7. The gain or loss recognized or realized as a result of the transaction; and

8. The name of the person from whom the assets were acquired or to whom they were disposed.

(b) Insurers must report material acquisitions or dispositions on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which uses a pooling arrangement or a 100-percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and the insurer has ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1 million in total direct and assumed written premiums during a calendar year which are not subject to a pooling arrangement and if the net income of the business which is not subject to the pooling arrangement represents less than 5 percent of the insurer’s capital and surplus.

(6) The nonrenewal, cancellation, or revision of a ceded reinsurance agreement need not be reported if the renewal or the revision is not material or if:

(a) With respect to property and casualty business, including accident and health business written by a property and casualty insurer, the insurer’s total ceded written premium represents, on an annualized basis, less than 10 percent of its total written premium for direct and assumed business; or

(b) With respect to life, annuity, and accident and health business, the total reserve credit taken for business ceded represents, on an annualized basis, less than 10 percent of the statutory reserve requirement before the cession.

(7)

(a) The following information must be disclosed in any report of a material nonrenewal, cancellation, or revision of a ceded reinsurance agreement:

1. The effective date of the nonrenewal, cancellation, or revision;

2. The description of the transaction and the identification of the initiator of the transaction;

3. The purpose of, or reason for, the transaction; and

4. If applicable, the identity of each replacement reinsurer.

(b) Insurers shall report the material nonrenewal, cancellation, or revision of a ceded reinsurance agreement on a nonconsolidated basis unless the insurer is part of a consolidated group of insurers which uses a pooling arrangement or a 100-percent reinsurance agreement that affects the solvency and integrity of the insurer’s reserves and the insurer has ceded substantially all of its direct and assumed business to the pool. An insurer is deemed to have ceded substantially all of its direct and assumed business to a pool if the insurer has less than $1 million in total direct and assumed written premiums during a calendar year which are not subject to a pooling arrangement and if the net income of the business not subject to the pooling arrangement represents less than 5 percent of the insurer’s capital and surplus.

Notes

Former s. 624.4435.

§624.449 FS | Insurer Investment in Foreign Companies

A domestic insurer shall provide to the office on an annual basis a list of investments that the insurer has in companies included on the Scrutinized Companies with Activities in Sudan List and the Scrutinized Companies with Activities in Iran Terrorism Sectors List compiled by the State Board of Administration pursuant to s. 215.473(2). The insurer’s list must include the name of the issuer and the stock, bond, security, and other evidence of indebtedness.

§624.45 FS | Participation of Financial Institutions in Reinsurance and in Insurance Exchanges

Subject to applicable laws relating to financial institutions and to any other applicable provision of the Florida Insurance Code, any financial institution or aggregation of such institutions may:

(1) Own or control, directly or indirectly, any insurer which is authorized or approved by the office, which insurer transacts only reinsurance in this state and which actively engages in reinsuring risks located in this state.

(2) Participate, directly or indirectly, as an underwriting member or as an investor in an underwriting member of any insurance exchange authorized in accordance with s. 629.401, which underwriting member transacts only aggregate or specific excess insurance over underlying self-insurance coverage for self-insurance organizations authorized under the Florida Insurance Code, for multiple-employer welfare arrangements, or for workers’ compensation self-insurance trusts, in addition to any reinsurance the underwriting member may transact.

Nothing in this section shall be deemed to prohibit a financial institution from engaging in any presently authorized insurance activity.

§624.460 FS | Short Title

Sections 624.460-624.488 may be cited as the “Commercial Self-Insurance Fund Act.”

§624.461 FS | Definition

For the purposes of the Florida Insurance Code, “self-insurance fund” means both commercial self-insurance funds organized under s. 624.462 and group self-insurance funds organized under s. 624.4621. The term “self-insurance fund” does not include a governmental self-insurance pool created under s. 768.28(16).

§624.462 FS | Commercial Self-Insurance Funds

(1) Any group of persons may form a commercial self-insurance fund for the purpose of pooling and spreading liabilities of its group members in any commercial property or casualty risk or surety insurance. Any fund established pursuant to subparagraph (2)(a)1. may be organized as a corporation under part I of chapter 607.

(2) As used in ss. 624.460-624.488, “commercial self-insurance fund” or “fund” means a group of members, operating individually and collectively through a trust or corporation, that must be:

(a) Established by:

1. A not-for-profit trade association, industry association, or professional association of employers or professionals which has a constitution or bylaws, which is incorporated under the laws of this state, and which has been organized for purposes other than that of obtaining or providing insurance and operated in good faith for a continuous period of 1 year;

2. A self-insurance trust fund organized pursuant to s. 627.357 and maintained in good faith for a continuous period of 1 year for purposes other than that of obtaining or providing insurance pursuant to this section. Each member of a commercial self-insurance trust fund established pursuant to this subsection must maintain membership in the self-insurance trust fund organized pursuant to s. 627.357;

3. A group of 10 or more health care providers, as defined in s. 627.351(4)(h), for purposes of providing medical malpractice coverage; or

4. A not-for-profit group comprised of one or more community associations responsible for operating at least 50 residential parcels or units created and operating under chapter 718, chapter 719, chapter 720, chapter 721, or chapter 723 which restricts its membership to community associations only and which has been organized and maintained in good faith for the purpose of pooling and spreading the liabilities of its group members relating to property or casualty risk or surety insurance which, in accordance with applicable provisions of part I of chapter 626, appoints resident general lines agents only, and which does not prevent, impede, or restrict any applicant or fund participant from maintaining or selecting an agent of choice. The fund may not refuse to appoint the agent of record for any fund applicant or fund member and may not favor one or more such appointed agents over other appointed agents.

(b)

1. In the case of funds established pursuant to subparagraph (a)2. or subparagraph (a)4., operated pursuant to a trust agreement by a board of trustees which shall have complete fiscal control over the fund and which shall be responsible for all operations of the fund. The majority of the trustees shall be owners, partners, officers, directors, or employees of one or more members of the fund. The trustees shall have the authority to approve applications of members for participation in the fund and to contract with an authorized administrator or servicing company to administer the day-to-day affairs of the fund.

2. In the case of funds established pursuant to subparagraph (a)1. or subparagraph (a)3., operated pursuant to a trust agreement by a board of trustees or as a corporation by a board of directors which board shall:

a. Be responsible to members of the fund or beneficiaries of the trust or policyholders of the corporation;

b. Appoint independent certified public accountants, legal counsel, actuaries, and investment advisers as needed;

c. Approve payment of dividends to members;

d. Approve changes in corporate structure; and

e. Have the authority to contract with an administrator authorized under s. 626.88 to administer the day-to-day affairs of the fund, including, but not limited to, marketing, underwriting, billing, collection, claims administration, safety and loss prevention, reinsurance, policy issuance, accounting, regulatory reporting, and general administration. The fees or compensation for services under such contract shall be comparable to the costs for similar services incurred by insurers writing the same lines of insurance, or where available such expenses as filed by boards, bureaus, and associations designated by insurers to file such data. A majority of the trustees or directors shall be owners, partners, officers, directors, or employees of one or more members of the fund.

(3) Each member of a commercial self-insurance trust fund established pursuant to this section, except a fund established pursuant to subparagraph (2)(a)3., must maintain membership in the association or self-insurance trust fund established under s. 627.357. Membership in a not-for-profit trade association, industry association, or professional association of employers or professionals for the purpose of obtaining or providing insurance shall be in accordance with the constitution or bylaws of the association, and the dues, fees, or other costs of membership shall not be different for members obtaining insurance from the commercial self-insurance fund. The association shall not be liable for any actions of the fund nor shall it have any responsibility for establishing or enforcing any policy of the commercial self-insurance fund. Fees, services, and other aspects of the relationship between the association and the fund shall be subject to contractual agreement.

(4) Any financial institution may participate as a member in a commercial self-insurance fund. A financial institution may not require as a condition precedent to making a loan that the prospective borrower insure with any commercial self-insurance fund. Any financial institution participating in a commercial self-insurance fund may participate only for the purpose of providing coverage on the financial institution’s direct commercial property and commercial casualty or surety insurance exposures. The financial institution may not participate for the purpose of covering the direct or indirect exposures of its customers.

(5) A commercial self-insurance fund created under subparagraph (2)(a)4. shall be an insurer for the purpose of any assessments levied by the Florida Hurricane Catastrophe Fund as provided under s. 215.555 or by the Citizens Property Insurance Corporation as provided under s. 627.351(6)(b)3. The office shall establish the method for determining the imputed premium that is subject to any such assessment.

(6) A governmental self-insurance pool created pursuant to s. 768.28(16) shall not be considered a commercial self-insurance fund.

§624.4621 FS | Group Self-Insurance Funds

(1) The commission shall adopt rules that allow two or more employers to enter into agreements to pool their liabilities under chapter 440 for the purpose of qualifying as a group self-insurer’s fund, which shall be classified as a self-insurer, and each employer member of such approved group shall be known as a group self-insurer’s fund member and shall be classified as a self-insurer as defined in chapter 440. The agreement entered into under this section may provide that the pool will be liable for 80 percent, and the employer member will be liable for 20 percent, of the medical benefits due any employee for an injury compensable under this chapter up to the amount of $5,000. One hundred percent of the medical benefits above $5,000 due to an employee for one injury shall be paid by the pool. The agreement may also provide that each employer member will be responsible for up to the first $500 of medical benefits due each of its employees for each injury. The claim shall be paid by the pool, regardless of its size, which shall be reimbursed by the employer for any amounts required to be paid by the employer under the agreement.

(2) The commission shall adopt rules:

(a) Requiring monetary reserves to be maintained by such self-insurers to insure their financial solvency; and

(b) Governing their organization and operation to assure compliance with such requirements.

(3) The commission shall adopt rules implementing the reserve requirements in accordance with accepted actuarial techniques.

(4) Any self-insurer established under this section, except for self-insurers that are state or local governmental entities, is required to carry reinsurance in accordance with rules adopted by the commission.

(5) A dividend or premium refund of any self-insurer established under this section, otherwise earned, may not be made contingent upon continued membership in the fund, renewal of any policy, or the payment of renewal premiums for membership in the fund or on any policy issued by such self-insurer.

(a) For any self-insurer established under this section before June 1, 2008, the board of trustees of the self-insurer may declare any moneys in excess of the amount necessary to fund all obligations of the self-insurer as refundable to the members or policyholders of the self-insurer. The board of trustees may distribute such dividends or premium refunds at the board’s discretion, in accordance with the agreement establishing the self-insurer and subject to the following limitations:

1. The amount of the distribution may not exceed the total sum of the dividends declared and unpaid to policyholders and unassigned funds as recorded on the most recently completed audited financial statements of the self-insurer.

2. The payment of the dividend or premium refund may not jeopardize the financial condition of the self-insurer or result in the self-insurer having a negative unassigned funds balance.

3. Notice of the dividend shall be submitted to the office no later than 10 days after the date on which payment of a dividend or premium refund is made.

(b) For any self-insurer established under this section after June 1, 2008, such self-insurer must receive prior written approval from the office for any dividend or premium refunds during its first 7 years of operation. The office shall issue a decision within 60 days after receiving a request for a dividend or premium refund.

(c) The notice or request submitted to the office for a dividend must contain the following information:

1. Audited financial statements as of the most recently completed fund year.

2. Annual evaluations of loss reserves by a qualified independent actuary as of the most recently completed fund year.

(d) If a self-insurer does not make or declare a dividend or member distribution payable during a given fund year, the required information listed in paragraph (c) shall be submitted annually, no later than 7 months after the end of the group self-insurer’s fund year.

(e) The notice or request submitted to the office for such dividend or premium refund must include a resolution of the board of trustees of the group self-insurer stating the specific amount that has been paid or that is sought to be paid to the members or policyholders. A dividend, premium refund, or premium discount or credit must not discriminate on the basis of continued coverage or continued membership in the group self-insurer. Any dividend or premium refund that cannot be paid to the applicable member or policyholder or former member or policyholder of the group self-insurer because the former member or policyholder cannot be reasonably located becomes the property of the group self-insurer.

(6) The office may impose civil penalties not to exceed $100 per occurrence for violations of the provisions of this chapter or rules adopted pursuant hereto.

(7) Premiums, contributions, and assessments received by a group self-insurer’s fund are subject to ss. 624.509(1) and (2) and 624.5092, except that the tax rate shall be 1.6 percent of the gross amount of such premiums, contributions, and assessments.

(8) This section does not apply to any program, intergovernmental agreement, cooperative effort, consortium, or agency through which two or more governmental entities, without pooling their liabilities, administer the payment of workers’ compensation to their respective employees.

(9) A group self-insurance fund shall participate in the Florida Self-Insurance Fund Guaranty Association.

(10) Any self-insurance fund which holds a certificate of authority on or after January 1, 1998, shall maintain surplus to policyholders in a positive amount.

(11)

(a) Notwithstanding any other provision of law, each application for workers’ compensation coverage issued by a group self-insurance fund established under this section must contain, in boldface and in not less than 10-point type, the following statement:

“This is a fully assessable policy. If the fund is unable to pay its obligations, policyholders must contribute, on a pro rata earned premium basis, the money necessary to meet any unfilled obligations.”

(b) If the application is signed by the applicant, the applicant is deemed to have made an informed, knowing acceptance of the assessment liability that exists as a result of participation in the fund.

(12) For any local governmental entity that is a member of a self-insurer established under this section, only an elected official of the local governmental entity may be the local governmental entity’s representative on the self-insurer’s governing body.

Notes

Former s. 440.57.

§624.4622 FS | Local Government Self-Insurance Funds

(1) Any two or more local governmental entities may enter into interlocal agreements for the purpose of securing the payment of benefits under chapter 440, or insuring or self-insuring real or personal property of every kind and every interest in such property against loss or damage from any hazard or cause and against any loss consequential to such loss or damage, provided the local government self-insurance fund that is created must:

(a) Have annual normal premiums in excess of $5 million;

(b) Maintain a continuing program of excess insurance coverage and reserve evaluation to protect the financial stability of the fund in an amount and manner determined by a qualified and independent actuary;

(c) Submit annually an audited fiscal year-end financial statement by an independent certified public accountant within 6 months after the end of the fiscal year to the office; and

(d) Have a governing body which is comprised entirely of local elected officials.

(2) A local government self-insurance fund that meets the requirements of this section is not subject to s. 624.4621 and is not required to file any report with the office under s. 440.38(2)(b) which is uniquely required of group self-insurer funds qualified under s. 624.4621. If any of the requirements of this section are not met, the local government self-insurance fund is subject to the requirements of s. 624.4621.

(3) Notwithstanding subsection (2), a local government self-insurance fund created under this section after October 1, 2004, shall initially be subject to the requirements of a commercial fund under s. 624.4621 and, for the first 5 years of its existence, shall be subject to all the requirements applied to commercial self-insurance funds or to group self-insurance funds, respectively.

(4)

(a) A local government self-insurance fund formed after January 1, 2005, shall, for its first 5 fiscal years, file with the office full and true statements of its financial condition, transactions, and affairs. An annual statement covering the preceding fiscal year shall be filed within 60 days after the end of the fund’s fiscal year, and quarterly statements shall be filed within 45 days after each such date. The office may, for good cause, grant an extension of time for filing an annual or quarterly statement. The statements shall contain information generally included in insurers’ financial statements prepared in accordance with generally accepted insurance accounting principles and practices and in a form generally used by insurers for financial statements, sworn to by at least two executive officers of the self-insurance fund. The form for financial statements shall be the form currently approved by the National Association of Insurance Commissioners for use by property and casualty insurers.

(b) Each annual statement shall contain a statement of opinion on loss and loss adjustment expense reserves made by a member of the American Academy of Actuaries. Workpapers in support of the statement of opinion must be provided to the office upon request.

Notes

Former s. 440.575.

§624.46223 FS | Notice of Intent to Withdraw

Any association, fund, or pool authorized by state law and created for the purpose of forming a risk management mechanism or providing self insurance for public entities in this state may not require its members to provide more than 45 days’ notice of the member’s intention to withdraw as a prerequisite for withdrawing from the association, fund, or pool.

Notes

As enacted by s. 43, ch. 2010-175. For a description of multiple provisions in the same session affecting a statutory provision, see preface to the Florida Statutes, “Statutory Construction.” Section 3, ch. 2010-175, also created s. 624.46223, and that version reads:

§624.46225 FS | Self-Insured Public Utilities

A self-insured public utility, as authorized by s. 440.38(1)(c), may assume by contract the liabilities under this chapter of contractors and subcontractors, or each of them, employed by or on behalf of such public utility when performing work on or adjacent to property owned or used by the public utility.

Notes

Former s. 440.571.

§624.46226 FS | Public Housing Authorities Self-Insurance Funds; Exemption for Taxation and Assessments

(1) Notwithstanding any other provision of law, any two or more public housing authorities in the state as defined in chapter 421 may form a self-insurance fund for the purpose of pooling and spreading liabilities of its members as to any one or combination of casualty risk or real or personal property risk of every kind and every interest in such property against loss or damage from any hazard or cause and against any loss consequential to such loss or damage, provided the self-insurance fund that is created:

(a) Has annual normal premiums in excess of $5 million.

(b) Uses a qualified actuary to determine rates using accepted actuarial principles and annually submits to the office a certification by the actuary that the rates are actuarially sound and are not inadequate, as defined in s. 627.062.

(c) Uses a qualified actuary to establish reserves for loss and loss adjustment expenses and annually submits to the office a certification by the actuary that the loss and loss adjustment expense reserves are adequate. If the actuary determines that reserves are not adequate, the fund shall file with the office a remedial plan for increasing the reserves or otherwise addressing the financial condition of the fund, subject to a determination by the office that the fund will operate on an actuarially sound basis and the fund does not pose a significant risk of insolvency.

(d) Maintains a continuing program of excess insurance coverage and reinsurance to protect the financial stability of the fund. The program must, at a minimum:

1. Include a net retention in an amount and manner selected by the administrator, ratified by the governing body, and certified by a qualified actuary;

2. Include reinsurance or excess insurance from authorized insurance carriers or eligible surplus lines insurers; and

3. Be certified by a qualified actuary as to the program’s adequacy. This certification must be submitted simultaneously with the certifications required under paragraphs (b) and (c).

(e) Submits to the office annually an audited fiscal year-end financial statement by an independent certified public accountant within 6 months after the end of the fiscal year.

(f) Has a governing body which is comprised entirely of commissioners of public housing authorities that are members of the public housing authority self-insurance fund or persons appointed by the commissioners of public housing authorities that are members of the public housing authority self-insurance fund.

(g) Uses knowledgeable persons or business entities to administer or service the fund in the areas of claims administration, claims adjusting, underwriting, risk management, loss control, policy administration, financial audit, and legal areas. Such persons must meet all applicable requirements of law for state licensure and must have at least 5 years’ experience with commercial self-insurance funds formed under s. 624.462, self-insurance funds formed under s. 624.4622, or domestic insurers.

(h) Submits to the office copies of contracts used for its members that clearly establish the liability of each member for the obligations of the fund.

(i) Annually submits to the office a certification by the governing body of the fund that, to the best of its knowledge, the requirements of this section are met.

A for-profit or not-for-profit corporation, limited liability company, or other similar business entity in which a public housing authority holds an ownership interest or participates in its governance under s. 421.08(8) may join a self-insurance fund formed under this section in which such public housing authority participates. Such for-profit or not-for-profit corporation, limited liability company, or other similar business entity may join the self-insurance fund solely to insure risks related to public housing.

(2) As used in this section, the term “qualified actuary” means an actuary that is a member of the Casualty Actuarial Society or the American Academy of Actuaries.

(3) A public housing authority’s self-insurance fund that meets the requirements of this section is not:

(a) An insurer for purposes of participation in or coverage by any insurance guaranty association established by chapter 631; or

(b) Subject to s. 624.4621 and is not required to file any report with the department under s. 440.38(2)(b) that is uniquely required of group self-insurer funds qualified under s. 624.4621.

(4) Premiums, contributions, and assessments received by a public housing authority’s self-insurance fund are subject to ss. 624.509(1) and (2) and 624.5092, except that the tax rate shall be 1.6 percent of the gross amount of such premiums, contributions, and assessments.

(5) If any of the requirements of subsection (1) are not met, a public housing authority’s self-insurance fund is subject to the requirements of s. 624.4621 if the fund provides only workers’ compensation coverage or is subject to the requirements of ss. 624.460-624.488 if the fund provides coverage for other property, casualty, or surety risks.

(6) Any public housing authority in the state as defined in chapter 421 that is a member of a self-insurance fund pursuant to this section shall be exempt from the assessments imposed under ss. 215.555, 627.351 and 631.57.

(7) Reinsurance companies complying with s. 624.610 may issue coverage directly to a public housing authority or an entity organized by a public housing authority under s. 421.08(8) if such public housing authority or entity self-insures its liabilities under this section. A public housing authority purchasing reinsurance or an entity that is organized by a public housing authority under s. 421.08(8) and that is purchasing reinsurance shall be considered an insurer for the sole purpose of entering into such reinsurance contracts. Contracts of reinsurance issued to public housing authorities self-insuring under this section or issued to entities that are organized by public housing authorities under s. 421.08(8) and that are self-insuring under this section shall receive the same tax treatment as reinsurance contracts issued to insurance companies. However, the purchase of reinsurance coverage by a public housing authority self-insuring under this section or by an entity that is organized by a public housing authority under s. 421.08(8) and that is self-insuring under this section shall not be construed as authorization to otherwise act as an insurer.

§624.4623 FS | Independent Educational Institution Self-Insurance Funds

(1) Notwithstanding any other provision of law, any two or more independent nonprofit colleges or universities accredited by the Commission on Colleges of the Southern Association of Colleges and Schools or independent, nonprofit, accredited secondary educational institutions, located in and chartered by the State of Florida, may form a self-insurance fund for the purpose of pooling and spreading liabilities of its group members in any property or casualty risk or surety insurance or securing the payment of benefits under chapter 440, provided the independent educational institution self-insurance fund that is created must:

(a) Have annual normal premiums in excess of $5 million;

(b) Maintain a continuing program of excess insurance coverage and reserve evaluation to protect the financial stability of the fund in an amount and manner determined by a qualified and independent actuary;

(c) Submit annually an audited fiscal year-end financial statement by an independent certified public accountant within 6 months after the end of the fiscal year to the office; and

(d) Have a governing body which is comprised entirely of independent educational institution officials.

(2) An independent educational institution self-insurance fund that meets the requirements of this section is not subject to s. 624.4621 and is not required to file any report with the department under s. 440.38(2)(b) which is uniquely required of group self-insurer funds qualified under s. 624.4621. If any of the requirements of this section are not met, the independent educational self-insurance fund is subject to the requirements of s. 624.4621.

§624.4625 FS | Corporation Not for Profit Self-Insurance Funds

(1) Notwithstanding any other provision of law, any two or more corporations not for profit located in and organized under the laws of this state may form a self-insurance fund for the purpose of pooling and spreading liabilities of its group members in any one or combination of property or casualty risk, provided the corporation not for profit self-insurance fund that is created:

(a) Has annual normal premiums in excess of $5 million.

(b) Requires for qualification that each participating member receive at least 75 percent of its revenues from local, state, or federal governmental sources or a combination of such sources.

(c) Uses a qualified actuary to determine rates using accepted actuarial principles and annually submits to the office a certification by the actuary that the rates are actuarially sound and are not inadequate, as defined in s. 627.062.

(d) Uses a qualified actuary to establish reserves for loss and loss adjustment expenses and annually submits to the office a certification by the actuary that the loss and loss adjustment expense reserves are adequate. If the actuary determines that reserves are not adequate, the fund shall file with the office a remedial plan for increasing the reserves or otherwise addressing the financial condition of the fund, subject to a determination by the office that the fund will operate on an actuarially sound basis and the fund does not pose a significant risk of insolvency.

(e) Maintains a continuing program of excess insurance coverage and reserve evaluation to protect the financial stability of the fund in an amount and manner determined by a qualified actuary. At a minimum, this program must:

1. Purchase excess insurance from authorized insurance carriers or eligible surplus lines insurers or reinsurers.

2. Retain a per-loss occurrence that does not exceed $350,000.

(f) Submit to the office annually an audited fiscal year-end financial statement by an independent certified public accountant within 6 months after the end of the fiscal year.

(g) Have a governing body that is comprised entirely of officials from corporations not for profit that are members of the corporation not for profit self-insurance fund.

(h) Use knowledgeable persons or business entities to administer or service the fund in the areas of claims administration, claims adjusting, underwriting, risk management, loss control, policy administration, financial audit, and legal areas. Such persons must meet all applicable requirements of law for state licensure and must have at least 5 years’ experience with commercial self-insurance funds formed under s. 624.462, self-insurance funds formed under s. 624.4622, or domestic insurers.

(i) Submit to the office copies of contracts used for its members that clearly establish the liability of each member for the obligations of the fund.

(j) Annually submit to the office a certification by the governing body of the fund that, to the best of its knowledge, the requirements of this section are met.

(2) As used in this section, the term “qualified actuary” means an actuary that is a member of the Casualty Actuarial Society or the American Academy of Actuaries.

(3) A corporation not for profit self-insurance fund that meets the requirements of this section is not:

(a) An insurer for purposes of participation in or coverage by any insurance guaranty association established by chapter 631; or

(b) Subject to s. 624.4621 and is not required to file any report with the department under s. 440.38(2)(b) that is uniquely required of group self-insurer funds qualified under s. 624.4621.

(4) Premiums, contributions, and assessments received by a corporation not for profit self-insurance fund are subject to ss. 624.509(1) and (2) and 624.5092, except that the tax rate shall be 1.6 percent of the gross amount of such premiums, contributions, and assessments.

(5) A corporation not for profit self-insurance fund formed under this section, which is hereby deemed to be an association in compliance with s. 627.654, may purchase for its members, on a group basis, any one or more policies of health, accident, or hospitalization coverage, provided:

(a) Insurance policies purchased to provide coverage under this subsection are purchased only from authorized insurance companies that participate in the Florida Life and Health Insurance Guaranty Association and such policy forms have been filed with and approved by the office;

(b) The corporation not for profit self-insurance fund retains no risk related to coverage provided under this subsection;

(c) An insurance policy purchased to provide coverage under this subsection shall not be subject to the restrictions relating to the premium rates for small employer groups under chapter 627;

(d) The premiums paid for insurance policies purchased pursuant to paragraph (a) shall not count toward the $5 million requirement in paragraph (1)(a); and

(e) Any individual not-for-profit entity participating as a member of the association for the purchase of a master health, accident, or hospitalization policy by the association under this subsection may retain its individual insurance agent, and such agent shall be deemed an additional agent of record for the master policy issued to the association.

(6) If any of the requirements of subsection (1) are not met, a corporation not for profit self-insurance fund is subject to the requirements of s. 624.4621 if the fund provides only workers’ compensation coverage or is subject to the requirements of ss. 624.460-624.488 if the fund provides coverage for other property, casualty, or surety risks.

§624.4626 FS | Electric Cooperative Self-Insurance Fund

(1) Notwithstanding any other provision of law, any two or more electric cooperatives organized pursuant to chapter 425 may operate a self-insurance fund for the purpose of pooling and spreading liabilities of its group members in securing the payment of benefits under chapter 440. A self-insurance fund established under this section must:

(a) Require that every member of the fund is jointly and severally liable for the obligations of the fund.

(b) Maintain a continuing program of excess insurance coverage and reserve evaluation to protect the financial stability of the fund in an amount and manner determined by a qualified and independent actuary.

(c) Subscribe to, or be a member of, a rating organization as prescribed in s. 627.231.

(d) Employ an independent certified public accountant to complete an audit of its fiscal year-end financial statement within 6 months after the end of the fiscal year.

(e) Have a governing body comprised of a representative from each member of the fund.

(f) Limit membership in the fund to electric cooperatives that operate in this state, their subsidiaries, and the current members of the Florida Rural Electric Self-Insurer’s Fund.

(g) At renewal, provide the members of the fund with a disclosure statement that notifies the members that the fund is not regulated by the office.

(2) A self-insurance fund that meets the requirements of this section is subject to the assessments set forth in ss. 440.49(8), 440.51(1), and 624.4621(7), but is not subject to any other provision of s. 624.4621 and is not required to file any report with the department under s. 440.38(2)(b) which is uniquely required of group self-insurer funds qualified under s. 624.4621.

§624.464 FS | Certificate of Authority Required; Penalties

(1) No person shall establish a commercial self-insurance fund unless such fund is issued a certificate of authority by the office pursuant to s. 624.466.

(2)

(a) Any person failing to hold a subsisting certificate of authority from the office while operating or maintaining a commercial self-insurance fund shall be subject to a fine of not less than $5,000 or more than $10,000 for each violation.

(b) Any person who operates or maintains a commercial self-insurance fund without a subsisting certificate of authority from the office shall be subject to the cease and desist penalty powers of the office as set forth in ss. 626.9571, 626.9581, 626.9591, and 626.9601.

(c) In addition to the penalties and other enforcement provisions of the Florida Insurance Code, the office is vested with the power to seek both temporary and permanent injunctive relief when:

1. A commercial self-insurance fund is being operated by any person or entity without a subsisting certificate of authority.

2. Any person, entity, or commercial self-insurance fund has engaged in any activity prohibited by the Florida Insurance Code made applicable by ss. 624.460-624.488 or by any rule adopted pursuant thereto.

3. Any commercial self-insurance fund, person, or entity is renewing, issuing, or delivering a policy, contract, certificate, summary plan description, or other evidence of the benefits and coverages provided to members without a subsisting certificate of authority.

The office’s authority to seek injunctive relief shall not be conditioned on having conducted any proceeding pursuant to chapter 120. The authority vested in the office by virtue of the operation of this section shall not act to reduce any other enforcement remedy or power to seek injunctive relief that may otherwise be available to the office.

§624.466 FS | Application Requirements for Certificate of Authority

All applications for a certificate of authority for a commercial self-insurance fund shall be on a form adopted by the commission and furnished by the office and shall include or have attached the following:

(1) The name of the fund and the location of the fund’s principal office, which shall be maintained within this state.

(2) The kinds of insurance initially proposed to be transacted and a copy of each policy, endorsement, and application form it initially proposes to issue or use.

(3) A copy of the constitution, bylaws, or trust agreement which governs the operation of the fund. The constitution, bylaws, or trust agreement shall contain a provision prohibiting any distribution of surplus funds or profit except to members of the fund, as approved by the office pursuant to s. 624.473.

(4) The names and addresses of the trustees of the fund. The office shall not grant or continue approval as to any fund if the office determines any trustee to be incompetent or untrustworthy; that any trustee has been found guilty of, or has pled guilty or no contest to, a felony, a crime involving moral turpitude, or a crime punishable by imprisonment of 1 year or more under the law of any state, territory, or country, whether or not a judgment or conviction has been entered; or that any trustee has had any type of insurance license revoked in this or any other state.

(5) A copy of a properly executed indemnity agreement binding each fund member to individual, several, and proportionate liability as set forth in ss. 624.472 and 624.474.

(6) A plan of risk management which has established measures and procedures to minimize both the frequency and severity of losses.

(7) Proof of competent and trustworthy persons to administer or service the fund in the areas of claims adjusting, underwriting, risk management, and loss control.

(8) Membership applications and the name and address of each member applying for coverage and a current financial statement on each member applying for coverage showing the aggregate net worth of all members to be not less than $500,000, a combined ratio of current assets to current liabilities of more than 1 to 1, and a combined working capital of an amount establishing financial strength and liquidity of the businesses to promptly provide for payment of the normal property or casualty claims proposed to be self-insured.

(9)

(a) An initial deposit of cash or securities of the type eligible for deposit by insurers under s. 625.52 in the amount of $100,000.

1. All income from deposits shall belong to the fund and shall be transmitted to the fund as it becomes available.

2. No judgment creditor or other claimant of the fund shall have the right to levy upon any of the assets or securities held as a deposit under this section.

(b) In lieu of the deposit of cash or securities, a fund may file with the office a surety bond in like amount. The bond shall be one issued by an authorized surety insurer, shall be for the same purpose as the deposit in lieu of which it is filed, and shall be subject to the office’s approval.

1. No bond shall be approved unless it covers liabilities arising from all policies and contracts issued and entered into during the time the bond is in effect and unless the office is satisfied that the bond provides the same degree of security as would be provided by a deposit of securities.

2. No bond shall be canceled or subject to cancellation unless at least 60 days’ advance notice thereof in writing is filed with the office.

(c) Deposits of securities or cash pursuant to this section shall be administered by the office and department in accordance with part III of chapter 625.

(10)

(a) Copies of acceptable excess insurance policies written by an insurer or insurers authorized or approved to transact insurance in this state, which excess insurance provides specific and aggregate limits and retention levels satisfactory to the office in accordance with sound actuarial principles. The office may waive this requirement if the fund demonstrates to the satisfaction of the office that its operation is and will be actuarially sound without obtaining excess insurance.

(b) At least 10 days prior to the proposed effective date of the issuance of any policy, the trustees shall submit proof that the members have paid into a common claims fund in a designated depository cash premiums in an amount of not less than $50,000 or 10 percent of the estimated annual premium of the members at the inception, whichever is greater.

(11) A copy of a fidelity bond or insurance policy from an authorized insurer providing coverage in an amount equal to not less than 10 percent of the funds handled annually and issued in the name of the fund covering its trustees, employees, administrator, or other individuals managing or handling the funds or assets of the fund. In no case may such bond or policy be less than $1,000 or more than $500,000, except that the office may for good cause prescribe an amount in excess of $500,000, subject to the 10-percent limitation of the preceding sentence.

(12)

(a) A plan of operation designed to provide sufficient revenues to pay current and future liabilities, as determined in accordance with sound actuarial principles.

(b) A statement prepared by an actuary who is a member of the American Academy of Actuaries or the Casualty Actuarial Society establishing that the fund has prepared a plan of operation which is based on sound actuarial principles. The office shall not approve the fund unless the office determines that the plan established by the fund is designed to provide sufficient revenues to pay current and future liabilities, as determined in accordance with sound actuarial principles.

(13) Such additional information as the commission or office reasonably requires.

§624.468 FS | Continuing Requirements for Certificate of Authority

After issuance of its initial certificate of authority a commercial self-insurance fund shall thereafter meet the following requirements as a condition of maintaining its certificate of authority:

(1) Maintenance of competent and trustworthy persons to service the program, as further specified in s. 624.466(7). Written notice shall be provided to the office before changing the fund’s method of fulfilling its servicing requirements.

(2) Maintenance of a risk management program as further specified in s. 624.466(6).

(3) Maintenance of a deposit of cash or securities in the amount of $100,000, or a surety bond in lieu thereof, as further specified in s. 624.466(9).

(4) Maintenance of excess insurance in accordance with sound actuarial principles, unless waived by the office, as further specified in s. 624.466(10).

(5) Maintenance of a fidelity bond, as further specified in s. 624.466(11).

(6) Maintenance of appropriate funded loss reserves determined in accordance with sound actuarial principles satisfactory to the office.

(7) Any self-insurance fund which holds a certificate of authority on or after January 1, 1998, shall maintain surplus to policyholders in a positive amount.

(8) Each fund shall have and maintain its principal place of business in this state and shall therein make available to the office upon reasonable notice complete records of its assets, transactions, and affairs in accordance with such methods and systems as are customary for, or suitable to, the kind or kinds of business transacted.

(9) A fund shall file such reports with the office as are required by s. 624.470.

(10) A fund shall report to the office within 15 days of a determination that the actual premiums written or liability assumed or any other factor which substantially contributes to the financial condition of the plan deviates by more than 25 percent from the projections used in the most recent annual report, as required by s. 624.470 or, if the first annual report has not yet been filed, projections used in the initial plan of operation.

(11) Payment of the annual license tax provided for in s. 624.501(3).

(12) A fund shall maintain records which will confirm that membership in the fund is in accordance with the constitution or bylaws of the association as required by s. 624.462(3). The office may request from the fund, not more than annually, a certification which confirms that all members of the fund are members of the association and are in compliance with the constitution or bylaws of the association and may require that the fund submit a plan, acceptable to the office, to eliminate membership that does not comply with s. 624.462(3).

§624.47 FS | Annual Reports

(1)

(a) Every self-insurance fund shall, annually within 3 months of the end of the fiscal year, file a financial statement of the fund, including its balance sheet and a statement of operations for the preceding year, verified by the oath of a member of the board of trustees or by an administrative executive appointed by the board. An entry for future investment income, reported on or after January 1, 1998, may only be reflected as an aggregate write-in asset on the balance sheet of the annual and quarterly financial statements. Future investment income shall be calculated as the sum of the admitted asset value of Line 1 (Bonds) plus the admitted asset value of Line 6 (Cash and Short-Term Investments) as reported on page 2 in the annual or quarterly financial statement, times the 3-year treasury note yield as of the date of the financial statement, times 3.

(b) For financial statements filed on or after January 1, 1998, future investment income may only be reported as an admitted asset by an Assessable Mutual or Self-Insurance Fund which reported future investment income in financial statements filed with the ¹Department of Insurance prior to January 1, 1998.

(2) Every fund shall, annually within 6 months of the end of the fiscal year, file a report with the office verified by the oath of a member of the board of trustees or by an administrative executive appointed by the board, containing the following information:

(a) A financial statement of the fund, including its balance sheet and a statement of operations for the preceding year certified by an independent certified public accountant.

(b) A report prepared by an actuary who is a member of the American Academy of Actuaries as to the actuarial soundness of the fund. The report shall consist of, but shall not be limited to, the following:

1. Adequacy of premiums or contributions in paying claims and changes, if any, needed in the contribution rates to achieve or preserve a level of funding deemed adequate, which shall include a valuation of present assets, based on statement value, and prospective assets and liabilities of the plan and the extent of any unfunded accrued liabilities.

2. A plan to amortize any unfunded liabilities and a description of actions taken to reduce unfunded liabilities.

3. A description and explanation of actuarial assumptions.

4. A schedule illustrating the amortization of any unfunded liabilities.

5. A comparative review illustrating the level of funds available to the commercial self-insurance fund from rates, investment income, and other sources realized over the period covered by the report, indicating the assumptions used.

6. A projection of the following year’s plan of operation, including additional number of members, gross premiums to be written, and projected liabilities.

7. A statement by the actuary that the report is complete and accurate and that in her or his opinion the techniques and assumptions used are reasonable and meet the requirements of this subsection.

8. Other factors or statements as may be reasonably required by the office or commission in order to determine the actuarial soundness of the plan.

(c) Any changes in the constitution, bylaws, or trust agreement of the fund.

Notes

Duties of the Department of Insurance were transferred to the Department of Financial Services or the Financial Services Commission by ch. 2002-404, and s. 20.13, creating the Department of Insurance, was repealed by s. 3, ch. 2003-1.

§624.472 FS | Member’s Liability

(1) The liability of each member other than a governmental entity for the obligations of the commercial self-insurance fund unrelated to governmental entities shall be individual, several, and proportionate, but not joint, except as provided in this section and s. 624.474. Nothing herein shall preclude a governmental entity from being a member of a fund established pursuant to this part. However, the liability of each governmental entity member shall be limited to the obligations of the commercial self-insurance fund related to governmental entities only and shall be individual, several, and proportionate, but not joint, except as provided in this section and s. 624.474.

(2) Subject to the limitations of subsection (1), each member shall have a contingent assessment liability for payment of actual losses and expenses incurred while her or his policy was in force.

(3) Each policy issued by the fund shall contain a statement of the contingent liability. Both the application for insurance and the policy shall contain, in contrasting color and in not less than 10-point type, the following statements:

“This is a fully assessable policy. In the event the fund is unable to pay its obligations, policyholders will be required to contribute on a pro rata earned premium basis the money necessary to meet any unfilled obligations.”

In lieu of the notice provided for above, a fund with governmental entity members shall provide the following notice to members other than governmental entities:

“This is a fully assessable policy. In the event the fund is unable to pay its obligations related to members which are not governmental entities, the policyholders which are not governmental entities will be required to contribute on a pro rata earned premium basis the money necessary to meet any such unfilled obligations.” A fund with governmental entity members shall provide the following notice to governmental entity members: “This is a fully assessable policy. In the event the fund is unable to pay its obligations related to governmental entity members, governmental entity policyholders will be required to contribute on a pro rata earned premium basis the money necessary to meet any such unfilled obligations.”

If the application is signed by the applicant, it must be conclusively presumed that there was an informed, knowing acceptance of the assessment liability that exists as a result of participation in the fund.

§624.473 FS | Dividends

A commercial self-insurance fund shall obtain the approval of the office prior to paying any dividend or refund to its members. No such dividend or refund may be approved until 12 months after the last day of the fiscal year for which the dividend or refund is payable, or such later time as the office may require in accordance with sound actuarial principles.

§624.474 FS | Assessments

(1) The trustees of a self-insurance fund operating as a trust, or the corporate directors of a self-insurance fund operating as a corporation, may assess from time to time members of a self-insurance fund liable therefor under the terms of their policies and pursuant to this section, or the department may assess the members in the event of liquidation of the fund.

(2) Subject to the limitations of s. 624.472(1), each member’s share of a deficiency for which an assessment is made shall be computed by applying to the premium earned on the member’s policy or policies during the period to be covered by the assessment the ratio of the total deficiency to the total premiums earned during such period upon all policies subject to the assessment. In the event one or more members fail to pay an assessment, the other members are liable on a proportionate basis for an additional assessment. The fund, acting on behalf of all members who paid the additional assessment, shall institute legal action when necessary and appropriate to recover the assessment from members who failed to pay it.

(3) In computing the earned premiums for the purposes of this section, the gross premium received by the fund for the policy shall be used as a base, deducting therefrom solely charges not recurring upon the renewal or extension of the policy.

(4) No member shall have an offset against any assessment for which she or he is liable on account of any claim for unearned premium or losses payable.

§624.4741 FS | Venue in Assessment Actions

In any action brought by a self-insurance fund to collect assessments levied under this chapter, venue lies where the fund maintains its principal place of business or, if the department, the office, or the Florida Group Self-Insurers Guaranty Association is a party to such action, in the Circuit Court of Leon County.

§624.475 FS | Tax on Premiums, Contributions, and Assessments

Premiums, contributions, and assessments received by a commercial self-insurance fund are subject to ss. 624.509(1) and (2) and 624.5092, except that the tax rate shall be 1.6 percent of the gross amount of such premiums, contributions, and assessments.

§624.476 FS | Impaired Self-Insurance Funds

(1) If the assets of a self-insurance fund are at any time insufficient to comply with the requirements of law or to discharge its liabilities, other than any liability on account of funds contributed by the trustees or others, and to meet the required conditions of financial soundness, or if a judgment against the fund has remained unsatisfied for 30 days, its trustees shall forthwith make up the deficiency or levy an assessment upon the members for the amount needed to make up the deficiency, but subject to the limitation set forth in the trust agreement or the policy.

(2) If any fund levies an assessment pursuant to subsection (1), the office shall require the fund to consent to administrative supervision under part VI of this chapter. The office may waive the requirement to consent to administrative supervision for good cause.

(3) If the trustees fail to make an assessment as required by subsection (1), the office shall order the trustees to do so. If the deficiency is not sufficiently made up within 60 days after the date of the order, the fund shall be deemed insolvent and grounds shall exist to proceed against the fund as provided for in part I of chapter 631.

(4) Notwithstanding the requirement of the fund to make an assessment pursuant to subsection (1) or subsection (3), the office may at any time request that the department be appointed receiver for purposes of rehabilitation or liquidation if it is able to demonstrate that any grounds for rehabilitation or liquidation exist pursuant to s. 631.051 or s. 631.061.

§624.477 FS | Liquidation, Rehabilitation, Reorganization, and Conservation

Any rehabilitation, liquidation, conservation, or dissolution of a self-insurance fund shall be conducted under the supervision of the office and department, which shall each have all power with respect thereto granted to the fund under part I of chapter 631 governing the rehabilitation, liquidation, conservation, or dissolution of insurers and including all grounds for the appointment of a receiver contained in ss. 631.051 and 631.061.

§624.48 FS | Filing, Approval, and Disapproval of Forms

(1) A basic insurance policy or application form for which written application is required and is to be a part of the policy or contract or printed rider or endorsement form may not be issued by a self-insurance fund unless the form has been filed with and approved by the office.

(2) Every such filing shall be made not less than 30 days in advance of any such use or delivery. At the expiration of such 30 days, the form so filed shall be deemed approved unless prior thereto it has been affirmatively approved or disapproved by order of the office. The office may extend by not more than an additional 15 days the period within which it may so affirmatively approve or disapprove any such form, by giving notice of such extension before expiration of the initial 30-day period. At the expiration of any such period as so extended, and in the absence of such prior affirmative approval or disapproval, any such form must be deemed approved.

(3) The office shall disapprove any form or withdraw any previous approval thereof only, if the form:

(a) Is in any respect in violation of, or does not comply with, this code.

(b) Contains or incorporates by reference, when such incorporation is otherwise permissible, any inconsistent, ambiguous, or misleading clauses, or any exceptions and conditions which deceptively affect the risk purported to be assumed in the general coverage of the contract.

(c) Has any title, heading, or other indication of its provisions which is misleading.

(d) Is printed or otherwise reproduced in such manner as to render any material provision of such form substantially illegible.

§624.482 FS | Making and Use of Rates

(1) With respect to all classes of insurance which a self-insurance fund underwrites, the rates must not be excessive, inadequate, or unfairly discriminatory. In determining what rates, including credits and surcharges, are excessive, inadequate, or unfairly discriminatory, the office shall apply the same standards applicable to other insurers regulated by the office.

(2) A rate shall be held to be excessive if the expense factors associated with the rate are not justified or are not reasonable for the benefits and services provided.

(3) Rates shall be deemed inadequate if they are clearly insufficient, together with the investment income attributable to them, to sustain projected losses and expenses in the class of business to which they apply.

(4) A rate shall be deemed inadequate as to the premium charged to a risk or group of risks if discounts or credits are allowed which exceed a reasonable reflection of expense savings and reasonably expected loss experience from the risk or group of risks.

(5) If the office determines that the continued use of a rate for a coverage endangers the solvency of the fund, it may issue an order requiring the rate to be increased or requiring the fund to limit or cease writing the coverage.

(6) A fund shall have the burden of proving that a rate filed is adequate if, during the first 5 years of issuing policies, the fund files a rate that is below the rate for loss and loss adjustment expenses for the same type and classification of insurance that has been filed by the Insurance Services Office and approved by the office.

(7) Nothing herein shall be construed to prohibit the office from examining a fund pursuant to s. 624.3161.

(8) A self-insurance fund shall file its rates, including credits and surcharge schedules, with the office for approval pursuant to the standards of this section and the procedures of s. 624.480(2).

(9) Any self-insurance fund may subscribe to, or be a member of, a rating organization as prescribed in s. 627.231. A rating organization may not discriminate against a self-insurance fund as to conditions of subscription or membership.

(10) Any self-insurance fund that writes workers’ compensation insurance and employer’s liability insurance is subject to, and shall make all rate filings for workers’ compensation insurance and employer’s liability insurance in accordance with, ss. 627.091, 627.101, 627.111, 627.141, 627.151, 627.171, 627.191, and 627.211.

§624.483 FS | Self-Insurer Members; Payment of Delinquent Premiums and Assessments

Upon petition of the trustees of the following self-insurers groups:

Printing Industry Associates,

Allied Gasoline Retailers Association,

Florida Plumbing and Mechanical Contractors,

Florida State Retailers Association,

Automotive Industries of Florida,

Florida Nurserymen and Growers Association,

Florida Pest Control Association,

Florida Wholesalers Association,

Florida Electrical Contractors,

Florida Home Builders,

Florida Restaurant Association, and

Florida Nursing Home Association,

who entered into agreements with Robert F. Coleman of Florida, Inc., as servicing agent, or any other self-insurers groups similarly situated, the department shall enter its order requiring the employer members and former members of said groups liable therefor to pay all delinquent premiums and all necessary assessments, such payments to be paid to the department and by it disbursed to said trustees to be used for the payment of workers’ compensation claims and related compensation expenses.

Notes

Former s. 440.58.

§624.484 FS | Registration of Agent

A self-insurance fund shall register with and designate the Chief Financial Officer as its agent solely for the purpose of receiving service of legal documents or process.

§624.486 FS | Examination

Self-insurance funds licensed under ss. 624.460-624.488 are subject to periodic examination by the office in the same manner and subject to the same terms and conditions applicable to insurers under part II of this chapter.

§624.487 FS | Enforcement of Specified Insurance Provisions

The office may enforce, with respect to group self-insurance funds established or operated under s. 624.4621, the provisions of s. 624.316, s. 624.424, s. 625.091, or s. 625.305 as they relate to workers’ compensation insurers.

Notes

Former s. 440.5705.

§624.488 FS | Applicability of Related Laws

In addition to other provisions of the code cited in ss. 624.460-624.488:

(1) Sections 624.155, 624.308, 624.414, 624.415, and 624.416(4); ss. 624.418-624.4211, except s. 624.418(2)(f); and s. 624.501;

(2) Parts I, II, and III of chapter 625;

(3) Applicable sections of part VI of chapter 626; s. 626.9541(1)(a), (b), (c), (d), (e), (f), (h), (i), (j), (k), (l), (m), (n), (o), (q), (u), (w), and (x); and ss. 626.9561-626.9641;

(4) Sections 627.291, 627.413, 627.4132, 627.416, 627.418, 627.420, 627.421, 627.425, 627.426, 627.4265, 627.427, 627.702, and 627.706; part XI of chapter 627; ss. 627.912, 627.913, and 627.918;

(5) Section 628.361(2) and s. 628.6014; and

(6) Parts I and V of chapter 631, apply to self-insurance funds. Only those sections of the code that are expressly and specifically cited in ss. 624.460-624.489 apply to self-insurance funds.

§624.489 FS | Liability of Trustees of Self-Insurance Trust Fund and Directors of Self-Insurance Funds Operating as Corporations

(1) A trustee of any self-insurance trust fund organized under the laws of this state is not personally liable for monetary damages to any person for any statement, vote, decision, or failure to act, regarding the management or policy of the fund, by a trustee, unless:

(a) The trustee breached or failed to perform her or his duties as a trustee; and

(b) The trustee’s breach of, or failure to perform, her or his duties constitutes:

1. A violation of the criminal law, unless the trustee had reasonable cause to believe her or his conduct was lawful or had no reasonable cause to believe her or his conduct was unlawful. A judgment or other final adjudication against a trustee in any criminal proceeding for violation of the criminal law estops that trustee from contesting the fact that her or his breach, or failure to perform, constitutes a violation of the criminal law; but does not estop the trustee from establishing that she or he had reasonable cause to believe that her or his conduct was lawful or had no reasonable cause to believe that her or his conduct was unlawful;

2. A transaction from which the trustee derived an improper personal benefit, either directly or indirectly; or

3. Recklessness or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety, or property.

(2) For the purposes of this section, the term “recklessness” means the acting, or omission to act, in conscious disregard of a risk:

(a) Known, or so obvious that it should have been known, to the trustee; and

(b) Known to the trustee, or so obvious that it should have been known, to be so great as to make it highly probable that harm would follow from such action or omission.

(3) The immunities from liability provided in this section with respect to trustees also apply to members of the board of directors of a commercial self-insurance fund organized as a corporation under part I of chapter 607 if the board of directors has contracted with an administrator authorized under s. 626.88 to administer the day-to-day affairs of the fund.

§624.490 FS | Registration of Pharmacy Benefit Managers

(1) As used in this section, the term “pharmacy benefit manager” has the same meaning as in s. 626.88.

(2) Effective January 1, 2019, to conduct business in this state, a pharmacy benefit manager must register with the office. To initially register or renew a registration, a pharmacy benefit manager shall submit:

(a) A nonrefundable fee not to exceed $500.

(b) A copy of the registrant’s corporate charter, articles of incorporation, or other charter document.

(c) A completed registration form adopted by the commission containing:

1. The name and address of the registrant.

2. The name, address, and official position of each officer and director of the registrant.

(3) The registrant shall report any change in information required by subsection (2) to the office in writing within 60 days after the change occurs.

(4) Upon receipt of a completed registration form, the required documents, and the registration fee, the office shall issue a registration certificate. The certificate may be in paper or electronic form and shall clearly indicate the expiration date of the registration. Registration certificates are nontransferable.

(5) A registration certificate is valid for 2 years after its date of issue. The commission shall adopt by rule an initial registration fee not to exceed $500 and a registration renewal fee not to exceed $500, both of which shall be nonrefundable. Total fees may not exceed the cost of administering this section.

(6) A person who fails to register with the office while operating as a pharmacy benefit manager is subject to a fine of $10,000 for each violation.

(7) The commission shall adopt rules necessary to implement this section.

§624.491 FS | Pharmacy Audits

(1) A pharmacy benefits plan or program as defined in s. 626.8825 providing pharmacy benefits must comply with the requirements of this section when the pharmacy benefits plan or program or any person or entity acting on behalf of the pharmacy benefits plan or program, including, but not limited to, a pharmacy benefit manager as defined in s. 626.88, audits the records of a pharmacy licensed under chapter 465. The person or entity conducting such audit must:

(a) Except as provided in subsection (3), notify the pharmacy at least 7 calendar days before the initial onsite audit for each audit cycle.

(b) Not schedule an onsite audit during the first 3 calendar days of a month unless the pharmacist consents otherwise.

(c) Limit the duration of the audit period to 24 months after the date a claim is submitted to or adjudicated by the entity.

(d) In the case of an audit that requires clinical or professional judgment, conduct the audit in consultation with, or allow the audit to be conducted by, a pharmacist.

(e) Allow the pharmacy to use the written and verifiable records of a hospital, physician, or other authorized practitioner, which are transmitted by any means of communication, to validate the pharmacy records in accordance with state and federal law.

(f) Reimburse the pharmacy for a claim that was retroactively denied for a clerical error, typographical error, scrivener’s error, or computer error if the prescription was properly and correctly dispensed, unless a pattern of such errors exists, fraudulent billing is alleged, or the error results in actual financial loss to the entity.

(g) Provide the pharmacy with a copy of the preliminary audit report within 120 days after the conclusion of the audit.

(h) Allow the pharmacy to produce documentation to address a discrepancy or audit finding within 10 business days after the preliminary audit report is delivered to the pharmacy.

(i) Provide the pharmacy with a copy of the final audit report within 6 months after the pharmacy’s receipt of the preliminary audit report.

(j) Calculate any recoupment or penalties based on actual overpayments and not according to the accounting practice of extrapolation.

(2) This section does not apply to:

(a) Audits in which suspected fraudulent activity or other intentional or willful misrepresentation is evidenced by a physical review, review of claims data or statements, or other investigative methods;

(b) Audits of claims paid for by federally funded programs; or

(c) Concurrent reviews or desk audits that occur within 3 business days after transmission of a claim and where no chargeback or recoupment is demanded.

(3) An entity that audits a pharmacy located within a Health Care Fraud Prevention and Enforcement Action Team (HEAT) Task Force area designated by the United States Department of Health and Human Services and the United States Department of Justice may dispense with the notice requirements of paragraph (1)(a) if such pharmacy has been a member of a credentialed provider network for less than 12 months.

(4) Pursuant to s. 408.7057, and after receipt of the final audit report issued under paragraph (1)(i), a pharmacy may appeal the findings of the final audit report as to whether a claim payment is due and as to the amount of a claim payment.

(5) A pharmacy benefits plan or program that, under terms of a contract, transfers to a pharmacy benefit manager the obligation to pay a pharmacy licensed under chapter 465 for any pharmacy benefit claims arising from services provided to or for the benefit of an insured or subscriber remains responsible for a violation of this section.

Notes

Former s. 465.1885.